Chitosan, a nature biodegradable material, has good biocompatibility but poor physical properties to serve as a nerve conduit. In this study, polylactic acid (PLA) was added to chitosan to form a composite material with improved intensity and elasticity, to be used as nerve conduits. The chitosan–PLA nerve conduits were fabricated with a mold casting/infrared dehydration technique. The constituent ratio of PLA and chitosan of 1:5 (v:v) was chosen to give the composite material both good mechanical properties and good biocompatibility. An in vitro cytotoxicity test showed that the chitosan–PLA material was not cytotoxic. The conduits were proved biodegradable and had many micropores to allow permeability. We evaluated chitosan–PLA nerve conduits as a guidance channel to repair 10 mm gaps in rat sciatic nerves. Nerve autograft and silicon conduits were used as the control. After 12 weeks, the regenerating nerves in three groups succeeded in passing through the nerve gap and reinnervating the muscle. Assessments, including ECG, histomorphometric evaluation, and weighing of triceps calf muscle, showed that the functional recovery of sciatic nerve was better in chitosan–PLA conduit group than in the silicon conduit group (P < 0.05), but the differences between the chitosan–PLA conduit group and the nerve autograft group were not significant (P > 0.05). Therefore, the chitosan–PLA guide proved to be a promising nerve conduit. © 2008 Wiley-Liss, Inc. Microsurgery, 2008.