We examined demyelinating lesions in the spinal cord of CBA mice infected with the BeAn strain of Theiler's virus to see if it was possible to document the sequence of changes which result in demyelination. It was found that the lesions which develop in the late stages of the disease were progressive. Therefore, by examining the different zones of a single lesion, it was possible to follow a sequence of changes which lead to demyelination. There was a clear progression from normal myelin, to vacuolated myelin, to myelin phagocytosis, to demyelinated axons, to remyelinated axons. Virus was detected in degenerating oligodendrocytes in the area showing myelin vacuolation by both electron microscopy and immunocytochemistry, a finding which indicated that virus infection precedes demyelination. The area of normal myelin which surrounded the zone of vacuolated myelin was infiltrated by lymphocytes, indicating that lymphocytic infiltration preceded viral replication and oligodendrocyte degeneration. Our observations indicate that cells of the immune system may play a role in the initiation of virus replication which appears to be a prerequisite for demyelination.