The histopathology of leprosy is described with particular reference to its effects on peripheral cutaneous nerves. Mycobacterium leprae invade the Schwann and perineurial cells of peripheral cutaneous nerves preferentially. The organisms are eventually destroyed with their host cells by a cell-mediated immune response. The effect is a dying-back phenomenon without the formation of neuromata. The sensory effects are gradually increasing anesthesia and localized nerve trunk pain but seldom any peripheral sensory reference or paresthesiae. Peripheral nerves are shown to be zones where there is some degree of immunologic privilege for Myco. leprae.