The major complication of reversal (or type 1) reactions in leprosy is peripheral nerve damage. The pathogenesis of nerve damage remains largely unresolved. In situ analyses suggest an important role for type 1 T cells. Mycobacterium leprae is known to have a remarkable tropism for Schwann cells that surround peripheral axons. Reversal reactions in leprosy are often accompanied by severe and irreversible nerve destruction and are associated with increased cellular immune reactivity against M. leprae. Thus, a likely immunopathogenic mechanism of Schwann cell and nerve damage in leprosy is that infected Schwann cells process and present antigens of M. Leprae to antigen-specific, inflammatory type 1 T cells and that these T cells subsequently damage and lyse infected Schwann cells. Previous studies using rodent CD8+ T cells and Schwann cells have revealed evidence for the existence of such a mechanism. Recently, a similar role has been suggested for human CD4+ T cells. These cells may be more important in causing leprosy nerve damage in vivo, given the predilection of M. leprae for Schwann cells and the dominant role of CD4+ serine esterase+ Th1 cells in leprosy lesions. Antagonism of molecular interactions between M. leprae, Schwann cells and inflammatory T cells may therefore provide a rational strategy to prevent Schwann cell and nerve damage in leprosy.