All patients with leprosy have some degree of nerve involvement. Perineural inflammation is the histopathologic hallmark of leprosy, and this localization may reflect a vascular route of entry of Mycobacterium leprae into nerves. Once inside nerves, M. leprae are ingested by Schwann cells, with a wide array of consequences. Axonal atrophy may occur early in this process; ultimately, affected nerves undergo segmental demyelination. Knowledge of the mechanisms of nerve injury in leprosy has been greatly limited by the minimal opportunities to study affected nerves in man. The nine-banded armadillo provides the only animal model of the pathogenesis of M. leprae infection. New tools available for this model enable the study and correlation of events occurring in epidermal nerve fibers, dermal nerves, and nerve trunks, including neurophysiologic parameters, bacterial load, and changes in gene transcription in both neural and inflammatory cells. The armadillo model is likely to enhance understanding of the mechanisms of nerve injury in leprosy and offers a means of testing proposed interventions.