The effect of sialodacryoadenitis virus (SDAV) infection on axonal regeneration and functional recovery was investigated in male Lewis rats. Animals underwent unilateral tibial nerve transection, immediate repair, and treatment with either FK506 (treated) or control vehicle (untreated). Serial walking track analyses were performed to assess functional recovery. Nerves were harvested for morphometric analysis on postoperative day 18 after an SDAV outbreak occurred that affected the 12 experimental animals. Histomorphometry and walking track data were compared against 36 historical controls. Rats infected with SDAV demonstrated severely impaired axonal regeneration and diminished functional recovery. Total fiber counts, nerve density, and percent neural tissue were all significantly reduced in infected animals (P < 0.05). Active SDAV infection severely impaired nerve regeneration and negated the positive effect of FK506 on nerve regeneration in rats. Immunosuppressive risks must be weighed carefully against the potential neuroregenerative benefits in the treatment of peripheral nerve injuries.