Focal demyelination was produced in the rat sciatic nerve by microinjection of lysophosphatidyl choline (LPC). The demyelinating lesion was examined over the following 48 h using the freeze-fracture technique to examine myelin, Schwann cell and axonal membranes. Myelin lamellae were replaced by myriad spherical or oval membranous vesicles. The axonal and Schwann cell plasma membranes remained intact and the latter showed a large increase in caveolae-associated pores in some nerve fibres. The lysis of myelin lamellae and membranous vesicle formation are related to the known action of LPC on myelin and its membrane fusogenic properties. The importance of calcium ion influx and membrane protein aggregation and depletion in vesiculation are discussed.