Peripheral nerve injury results in changes in action potential waveform, ion channel organization, and firing properties of primary afferent neurons. It has been suggested that these changes are the result of reduction in basal trophic support from skin targets. Subcutaneous injections of Fluro-Gold (FG) in the hind limb of the rat were used to identify cutaneous primary afferent neurons. Five days after FG injection, sciatic nerves were ligated and encapsulated in a silicon tube allowing neuroma formation. Green fluorescent protein (GFP)-expressing Schwann cells (SCs) were injected proximal to the cut end of the nerve. Thirteen to 22 days after injury and SC injection, the L4 and L5 dorsal root ganglia (DRG) were prepared for acute culture. Whole cell patch-clamp recordings in current clamp mode were obtained and action potential properties of medium-sized (34-45 microm) FG+ DRG neurons were characterized. In the neuroma group without cell transplantation, action potential duration and spike inflections were reduced as were the amplitude and duration of spike afterhyperpolarizations. These changes were not observed after transection by nerve crush where axons were allowed to regenerate to distal peripheral targets. In the transplantation group, GFP(+)-SCs were extensively distributed throughout the neuroma, and oriented longitudinally along axons proximal to the neuroma. Changes in action potential properties were attenuated in the GFP(+)-SC group. Thus the engrafted SC procedure ameliorated the changes in action potential waveform of cutaneous primary afferents associated with target disconnection and neuroma formation.