Nerve axons and the apical epidermal cap (AEC) are both essential for the formation of an accumulation blastema by amputated limbs of urodele salamanders. The AEC forms in the absence of axons, but is not maintained, and blastema formation fails. Growth stages of the blastema become nerve-independent for morphogenesis, but remain dependent on the nerve for blastema growth. Denervated growth stage blastemas form smaller than normal skeletal parts, owing to diminished mitosis, but form the full proximodistal array of skeletal elements. This difference in nerve dependency of morphogenesis and proliferation is hypothesized to be the result of a dependence of the AEC on nerves for blastema cell proliferation but not for blastema morphogenesis. Regenerating axons induce the synthesis and secretion of the anterior gradient protein (AGP) by distal Schwann cells during dedifferentiation and by the gland cells of the AEC during blastema growth stages. AGP promotes the regeneration of a denervated limb to digit stages when electroporated into the limb during dedifferentiation. Once a critical mass of blastema cells has been attained, the blastema can undergo morphogenesis in the absence of the nerve, but the regenerate will be a miniature, because the nerve is no longer inducing the AEC to carry out its AGP-mediated proliferative function. AGP expression by both Schwann cells and the AEC is induced by axons, but the nature of the inductive agent is unclear.