Context: Neural granulomas are hallmark of leprosy. Challenges faced in diagnosing paucibacillary leprosy include: (i) Difficult visualization of nerve twigs on hematoxylin and eosin (H and E) sections due to their small size and (ii) Paucity of organisms on acid–fast bacilli stain. Aims: (1) This study aimed to test the role of S100 immunostain in demonstrating neural granulomas in skin biopsies of paucibacillary leprosy, (2) to compare morphology of S100 staining of nerves inside granulomas among clinicohistologically defined different types of leprosy, and (3) to test whether the pattern of S100 immunostaining can distinguish nerve fragmentation/destruction from a normal intact nerve in skin biopsy. Materials and Methods: Sixty four diagnosed cases of leprosy were included in this study. Five skin biopsies with no significant pathology (for studying intact nerve) and nine nonleprosy cutaneous granulomas were also studied. Results: (i) In demonstrating neural granuloma, sensitivity of H and E was 48.27% and that of S100 was 100%, (ii) Morphology of nerve fragments on S100 stain for cases of leprosy was fragmented and infiltrated in 37, intact and infiltrated in 19, reduced, fragmented, and infiltrated in seven, and absent in one, (iii) There was a significant difference (P<0.001) in the pattern of staining of S100 on intact nerve and nerves involved by granuloma in leprosy, and (iv) The probability to differentiate between leprosy and nonleprosy granuloma was statistically significant (P<0.001). Conclusion: S100 immunostaining showed to be an effective adjuvant to histopathology in diagnosing paucibacillary leprosy and differentiating it from nonleprosy cutaneous granuloma.