Functional neuronal recovery following injury arises when severed axons reconnect with their targets. In Caenorhabditis elegans following laser-induced axotomy, the axon still attached to the cell body is able to regrow and reconnect with its separated distal fragment. Here we show that reconnection of separated axon fragments during regeneration of C. elegans mechanosensory neurons occurs through a mechanism of axonal fusion, which prevents Wallerian degeneration of the distal fragment. Through electron microscopy analysis and imaging with the photoconvertible fluorescent protein Kaede, we show that the fusion process re-establishes membrane continuity and repristinates anterograde and retrograde cytoplasmic diffusion. We also provide evidence that axonal fusion occurs with a remarkable level of accuracy, with the proximal re-growing axon recognizing its own separated distal fragment. Thus, efficient axonal regeneration can occur by selective reconnection and fusion of separated axonal fragments beyond an injury site, with restoration of the damaged neuronal tract. Developmental Dynamics 240:1365–1372, 2011. © 2011 Wiley-Liss, Inc.