Peripheral nerve repair is often complicated by fibroblastic scar formation, nerve dysfunction, and traumatic neuroma formation. Use of bio-absorbable protective wraps may improve outcomes of these repairs. This study histologically compared the incidence of neuroma formation, connective tissue proliferation, and axonal regrowth in transected rat sciatic nerves repaired with and without tubular collagen nerve sleeves. Twenty Sprague-Dawley rats underwent unilateral sharp sciatic nerve transection and microscopic nerve repair with four epineural sutures and were randomly treated with or without an encircling collagen nerve sleeve. Normal nerves from the contralateral sciatic nerve were also examined. At sacrifice three months later, the nerves were evaluated for traumatic neuroma formation, perineural scar formation, and morphometric analysis. Histological examination of normal and repaired nerves by a neuropathologist demonstrated healing, minimal Wallerian degeneration and no traumatic neuroma formation. Distal section analysis (nine nonwrapped, 10 wrapped), revealed no significant differences in total fascicular area, myelinated fibers per nerve, fiber density, myelin area per nerve, myelinated fiber diameter, axon diameter, myelin thickness, or G-ratio. Significantly greater (P = 0.005) inner epineural connective tissue formation was observed in nonwrapped nerves (0.62 mm(2) +/- 0.2) versus wrapped nerves (0.35 mm(2) +/- 0.16). The ratio of connective tissue to fascicular area was larger in nonwrapped (1.08 +/- 0.26) versus wrapped nerves (0.63 +/- 0.22) (P < 0.001). This study demonstrated decreased inner epineural connective tissue formation with use of a collagen nerve wrap during primary repair of peripheral nerve transection in a rat sciatic nerve model.