A technique for repair of peripheral nerves with the argon laser was evaluated with regard to functional and histological recovery. The results were compared with those of reconstruction by a microsurgical epineurial-suture technique. The terminal branch of the peroneal nerve to the extensor digitorum longus in thirty-three New Zealand White rabbits served as the experimental model. Histology and neuromuscular function were evaluated at one, two, and six months after repair. When the diameters of the axons and the morphology distal to the site of repair were evaluated, the nerves that had been repaired with the laser more closely resembled those of the control rabbits. Examination of the site of repair also revealed less foreign-body reaction and axonal outgrowth in the laser-repaired nerves than in those that had been reconstructed with epineurial suture. Neuromuscular function was evaluated by measurement of the force of contraction of the extensor digitorum longus after electrical stimulation of the nerve proximal to the site of repair. Functional recovery paralleled the histological findings. At one month, there was no difference in the neuromuscular function that had been achieved with either technique. At two months, the laser-repaired nerves began to show increased muscular strength at higher frequencies of stimulation (sixteen and thirty-two hertz). Six months postoperatively, the nerves that had been repaired with the laser had consistently better neuromuscular function than those that had been repaired by epineurial suture. The improvement was most marked at higher voltages of stimulation (threshold multiplied by ten) and at frequencies of stimulation of more than sixteen hertz.