Canine distemper virus (CDV) causes severe immunosuppression and neurological disease in dogs, associated with demyelination, and is a model for multiple sclerosis in man. In the early stage of the infection, demyelination is associated with viral replication in the white matter. In acute demyelinating lesions there is massive down-regulation of myelin transcription and metabolic impairment of the myelin-producing cells, but there is no evidence that these cells are undergoing apoptosis or necrosis. Oligodendroglial change is related to restricted infection of these cells (transcription but no translation) and marked activation of microglial cells in acute lesions. Concomitant with immunological recovery during the further course of the disease, inflammation occurs in the demyelinating plaques with progression of the lesions in some animals. A series of experiments in vitro suggests that chronic inflammatory demyelination is due to a bystander mechanism resulting from interactions between macrophages and antiviral antibodies. Autoimmune reactions are also observed, but do not correlate with the course of the disease. The progressive or relapsing course of the disease is associated with viral persistence in the nervous system. Persistence of CDV in the brain appears to be favored by non-cytolytic selective spread of the virus and restricted infection, in this way escaping immune surveillance in the CNS. The CDV Fusion protein appears to play an important role in CDV persistence. Similarities between canine distemper and rodent models of virus-induced demyelination are discussed.