Immunocytochemical localization of cathepsin D was studied in rat nerves using an antibody to cathepsin D (CD). In normal or control nerves, immunoreactive CD was present in the cytoplasm of Schwann cells but not in axons. In ligated or transected nerves, intraaxonal CD appeared as granular or elongated particles increasing with time at the cut end of the distal stump. In the proximal stump of transected nerves, CD was detected in the nascent axon tips, as well as in a length of axon extending up to the first node of Ranvier. In swollen axons induced by 2,5-hexanedione (HD), CD was associated with granular particles in areas where bidirectional organelle movement was impaired. This study represents the first documentation of intraaxonal CD and provides evidence that immunoreactive CD originates at the nerve terminal in conjunction with the anterograde-to-retrograde (A-R) conversion process of axoplasmic transport. When the A-R conversion process is induced at more proximal sites in the nerve by transection, CD can be observed. In circumstances where axoplasmic transport is impaired, such as nerves exposed to 2,5-HD or ligated and transected nerves, CD-positive granular particles were seen in association with retrogradely moving organelles and their accumulation was related to sites of preferential axonal degeneration.