Clinical, electrodiagnostic, and morphological studies were performed on three patients with localized hypertrophic neuropathy (LHN). LHN is characterized clinically by slowly progressive motor mononeuropathy without significant pain or numbness. Nerve conduction studies and needle electrode examination show severe focal motor and sensory axonal loss. Morphological findings in the localized areas of enlarged nerves are different from those of generalized hypertrophic neuropathy, entrapment neuropathy, and neurofibroma, and consist of primary perineurial cell hyperplasia. The tumor is thus a perineurioma. This rare tumor can occur both in generalized neurofibromatosis and in isolated form and appears to be the cause of localized hypertrophic neuropathy.