To study the effect of intrauterine growth retardation (IUGR) on fetal peripheral neuronal elements, we examined preputial skin tissues of ten growth-retarded neonates (mean gestational age 36 ± 2.3 weeks) and six normal control neonates (mean gestational age 35 ± 3.0 weeks) by transmission electron microscopy. The myelinated and unmyelinated nerve fibers of growth-retarded neonates contained significant ultrastructural alterations, consisting of 1) local aggregation of mitochondria, 2) loss of mitochondrial cristae, 3) the presence of large vacuoles within the axoplasm, and 4) myelinated fiber degeneration. The Schwann cells of these neonates exhibited accumulation of glycogen, disruption of cytoplasm, dilatation of rough endoplasmic reticulum, and extensive development of polyribosomes. None of the above changes were observed in the control infants, those appropriate for gestational age. We conclude that IUGR may cause significant ultrastructural changes in developing peripheral neuronal tissue.