A number of axonal properties, including slow axonal transport and neurofilament phosphorylation, are altered in a mutant mouse strain with a Schwann cell deficiency, the Trembler. The Trembler phenotype is associated with poor myelination and reduced axonal caliber in the peripheral nervous system, but the genetic lesion has not yet been identified. To determine whether changes in axonal properties resulted from a direct action of Schwann cells on the axon, a segment of sciatic nerve from myelin-deficient Trembler mouse was grafted into the sciatic nerve of a normal mouse and normal axons were allowed to regenerate. Normal axons surrounded by Trembler Schwann cells are reduced in diameter, but resume their original diameter distal to the graft. Neurofilament transport was also affected locally in sciatic nerves with Trembler grafts into normal nerve. The velocity of neurofilament transport was not significantly different from controls in portions of the nerve proximal to the Trembler graft, but there was a reduction in neurofilament transport rates upon entering the Trembler graft. This was accompanied by an increase in the ratio of neurofilament over tubulin in the case of the Trembler graft, suggesting both a slowing of the neurofilament and an increase in the rate of tubulin transport. Using heterologous grafts of Trembler nerve segments into wildtype nerves, Schwann cells were shown to locally influence axonal caliber, neurofilament organization, and slow axonal transport. These observations emphasize the importance of glial cells in modulating neuronal structure and functions, as well as focusing attention on the role of glia in the etiology of neuropathologies that alter the neuronal environment.