The clinical treatment of traumatized peripheral nerves often requires grafting of autologous cutaneous nerves. However, there are drawbacks in sacrificing healthy nerves and tissue scarring. In this study, an artificial material, freeze-dried chitosan gel sponge, was examined as a scaffold for nerve regeneration in rats. An 8-mm gap was made by removing a segment of the sciatic nerve, and the distal and proximal stumps were sandwiched by chitosan gel sponge. Rats were killed at 4, 7, 14, and 28 days, and 2 and 4 months after the operation and histological and morphometric evaluations were performed. Regenerating axons were observed at 4 days after the operation. Regenerating nerves extended the distal stump at 14 days after surgery. By electron microscopy, numerous macrophages appeared to phagocyte chitosan, and made a dense cell layer on the chitosan. Regenerating axons did not touch the chitosan, and extended through the space surrounded by macrophage-stacked chitosan. Regenerating nerves were well-myelinated 2 months after surgery. Regenerating nerves were on average 2.45 and 2.75 microm in diameter at 2 and 4 months, respectively, after surgery. These results indicate that the chitosan gel sponge sandwich might be suitable as a graft for peripheral nerve regeneration.