The perisynaptic Schwann cell (PSC) has gained recent attention with respect to its roles in synaptic function, remodeling, and regeneration at the vertebrate neuromuscular junction (NMJ). Here we test the hypothesis that, following nerve injury, processes extended by PSCs guide regenerating nerve terminals (NTs) in vivo, and that the extension of sprouts by PSCs is triggered by the arrival of regenerating NTs. Frog NMJs were double‐stained with a fluorescent dye, FM4‐64, for NTs, and fluorescein isothiocyanate (FITC)‐tagged peanut agglutinin (PNA) for PSCs. Identified NMJs were imaged in vivo repeatedly for several months after nerve injury. PSCs sprouted profusely beginning 3–4 weeks after nerve transection and, as reinnervation progressed, regenerating NTs closely followed the preceding PSC sprouts, which could extend tens to hundreds of microns beyond the original synaptic site. The pattern of reinnervation was dictated by PSC sprouts, which could form novel routes joining neighboring junctions or develop into new myelinated axonal pathways. In contrast to mammals, profuse PSC sprouting in frog muscles was not seen in response to axotomy alone, and did not occur at chronically denervated NMJs. Instead, sprouting coincided with the arrival of regenerating NTs. Immunofluorescent staining revealed that in muscle undergoing reinnervation 4 weeks after axotomy, 91% of NMJs bore PSC sprouts, compared to only 6% of NMJs in muscle that was chronically denervated for 4 weeks. These results suggest that reciprocal interactions between regenerating NTs and PSCs govern the process of reinnervation at frog NMJs: regenerating NTs induce PSCs to sprout, and PSC sprouts, in turn, lead and guide the elaboration of NTs. © 2000 John Wiley & Sons, Inc. J Neurobiol 44: 343–360, 2000