We injected an immunoadjuvant, muramyl dipeptide (MDP), intrafascicularly into crushed rat sciatic nerve so as to test whether activation of macrophages promotes regeneration of peripheral nerve from crush injury and improves walking locomotion in rats. Immunohistochemical staining of Schwann cells and macrophages with anti-S100 and ED-1 monoclonal antibodies revealed that macrophages are more abundant and phagocytic in nerve injected with MDP than in control. Axonal elongation in damaged nerve and locomotion recovery in rats were evaluated with pinch test and measurement of sciatic nerve functional index (SFI), respectively. Pinch test showed a 15.5% increase in length (n = 6, p < 0.05) of elongating axons for MDP-injected group 5 days after the crush injury comparing to the control group. The value of SFI obtained from the rats injected with MDP showed a 18.3 % increase (n = 4-6, p < 0.01) comparing to the control 3 weeks after the crush injury. Activation of macrophages in the nerve injected with MDP was monitored by detecting gene expression of marker molecules for macrophages such as apolipoprotein E (ApoE), interleukin-1beta (IL-1beta) and macrophage inflammatory protein-1alpha (MIP-1alpha) using reverse transcription-PCR (RT-PCR) technique 2 days and 1 week after the injection. Levels of transcripts of IL-1beta and MIP-1alpha were up-regulated in the nerves injected with MDP 1 week after MDP injection. These results suggest that an intrafascicular injection of MDP activates macrophages infiltrating into damaged nerve and that the macrophages support elongation of regenerating axon, resulting in functional recovery of sciatic nerve from injury in rats.