In peripheral nerves of mouse embryos Schwann cells exhibit a high activity of unspecific cholinesterase. At first (day 12 of embryonic development) this enzyme occurs in the nuclear envelope and in the granular endoplasmic reticulum. Thus, it is possible to differentiate between Schwann cells and fibroblasts which lack cholinesterase. Later on (day 16) the cholinesterase has shifted to the cell membrane of the Schwann cells. However, only that part of the plasmalemma which encircles single axons and the mesaxons exhibits an irregular deposition of the reaction end product. In newborns the first loops of the just formed myelin sheath are still stained. With maturation of the myelin sheath the enzyme activity disappears. The functional role of cholinesterase is unclear. Possible roles are discussed. The expression of cholinesterase in Schwann cells depends on the integrity of the axons. After a few hours the cultivation of amputated limbs results in a reduction of the enzyme activity. After 1 day in culture cholinesterase disappears totally.