Forty-three children (aged 7 to 62 months) with protein calorie malnutrition (PCM) were studied; 13 had mild to moderate PCM and 30 severe PCM. A reduction of motor nerve conduction velocity and abnormalities of sensory conduction were present in both groups. The abnormality of motor nerve conduction was directly related to the severity of PCM and the presence of hypotonia and/or hyporeflexia. Sural nerve biopsies from both groups were studied for myelinated fibre density, fibre size spectrum, relationship of internodal length with diameter and qualitative light microscopic changes. The biopsies from children with mild to moderate PCM were characterized by a normal developmental change in myelinated fibres with an increasing proportion of medium and large size fibres, a transition from a unimodal to a bimodal distribution and an appropriate relationship of internodal length to fibre diameter. Evidence of mild segmental demyelination was observed in only one patient of this group. In contrast, in the biopsies from children with severe PCM, the normal developmental pattern for myelinated fibre size distribution was impaired with a persistence of small myelinated fibres, and there was a failure of internodal segments on large fibres to elongate with increase in age and significant segmental demyelination in about 50 per cent of cases. Retarded myelination and segmental demyelination probably form the morphological basis for impaired peripheral nerve function in PCM. Short internodes on large diameter fibres may also contribute to this effect.