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The nervous system has long been considered an immunologically privileged site. This concept was based on the premises that: (1) there is a more or less strict anatomic separation between the systemic immune compartment (blood) and the neural tissue; (2) molecules required for antigen presentation are absent under normal circumstances; (3) there is no lymphatic drainage; and (4) immune surveillance by T cells is lacking. It is now obvious that most of these assumptions are not tenable. The blood–nerve barrier (BNB) does restrict access of immune cells and soluble mediators to a certain degree; however, this restriction is not complete, either anatomically (e.g. the BNB is absent or relatively deficient at the roots, in the ganglia and the motor terminals) or functionally. Activated T lymphocytes can penetrate intact barriers irrespective of their antigen specificity, and, under certain circumstances, release cytokines that upregulate the expression of major histocompatibility complex (MHC) class II molecules, key molecules required for antigen presentation. In the central nervous system (CNS) tissue-resident neuroglial cells are present that actively participate in the regulation of immune responses within the tissue. In recent years, several lines of evidence have pointed to Schwann cells as immunocompetent cells within the peripheral nervous system (PNS), which, in addition to their physiological roles, exhibit a broad spectrum of immune-related functions and might be involved in the local immune response in the PNS. In this chapter we will elaborate on the expanding recognition of Schwann cells as immunocompetent cells that form part of the local immune circuitry within the PNS. Interestingly, present data suggest that the entire spectrum of an immune response can be displayed by Schwann cells; recognition of antigens, presentation of antigens, mounting an immune response, and, finally, terminating an immune response within the inflamed peripheral nerve.