The mechanism of focal demyelination in multiple sclerosis has been a long-standing enigma of this disorder. Cytokines, a diverse family of signalling molecules, are viewed as potential mediators of the process based on clinical observations and studies with animal models and tissue/cell culture systems. Myelin and oligodendrocyte (OL) destruction occur in cultured preparations subjected to cytokines such as tumor necrosis factor-α (TNFα) and lymphotoxin (LT). Many studies have shown these and other cytokines to be elevated at lesion sites and in the CSF of multiple sclerosis (MS) patients, with similar findings in animal models. Some variability in the nature of MS lesion formation has been reported, both OLs and myelin being primary targets. To account for myelin destruction in the presence of apparently functional OLs we hypothesize that cytokines such as TNFα and LTα contribute to myelin damage through triggering of specific reactions within the myelin sheath. We further propose that neutral sphingomyelinase (SMase) is one such enzyme, two forms of which have been detected in purified myelin. An additional event is accumulation of cholesterol ester, apparently a downstream consequence of cytokine-induced SMase. The resulting lipid changes are viewed as potentially destabilizing to myelin, which may render it more vulnerable to attack by invading and resident phagocytes.