The rapid accumulation of myelin in the peripheral nervous system during the early postnatal period requires large amounts of cholesterol, a major myelin lipid. All of the cholesterol accumulating in the developing rat sciatic nerve is synthesized locally within the nerve, rather than being derived from the supply in lipoproteins in the systemic circulation (Jurevics and Morell, J. Lipid Res. 5:112–120; 1994). Since this lack of utilization of circulating cholesterol may relate to exclusion by the blood-nerve barrier, we examined the sources of cholesterol needed for regeneration following nerve injury, when the blood-nerve barrier is breached. One sciatic nerve was crushed or transected, and at various times later, the rate of cholesterol accumulation was compared with the rate of local in vivo synthesis of cholesterol within the nerve, utilizing intraperitoneally injected 3H2O as precursor. The accumulation of additional cholesterol in nerve during regeneration and remyelination could all be accounted for by that locally synthesized within the nerve. There was also an increase in cholesterol esters in injured nerve segments; in crushed nerves, these levels decreased during regeneration and remyelination, consistent with reutilization of cholesterol originally salvaged by phagocytic macrophages and Schwann cells. Thus, regeneration and remyelination following injury in sciatic nerve utilizes both salvaged cholesterol and cholesterol synthesized locally within the nerve, but not cholesterol from the circulation.