Mice experimentally infected with Theiler's murine encephalomyelitis virus (TMEV) develop a persistent infection of the central nervous system (CNS). The most striking feature of this infection is the occurrence of inflammatory primary demyelination in the spinal cord white matter. The pathogenesis of myelin degeneration in this model has not been clarified, but morphologic and immunologic data suggest that the host immune response plays a major role in the production of myelin injury. Because of low virus titers in infected adult mice and of the small size of TMEV, virus particles have never been observed in this demyelinating model. Yet elucidation of the types of cells in the CNS supporting virus replication would be important for a better understanding of both virus persistence and virus-induced demyelinating pathology. The present paper is a sequential study of the localization of TMEV in the spinal cord in infected mice by ultrastructural immunohistochemical techniques. Results indicate that virus replication is mainly in neurons during the acute phase of the disease, while in the chronic phase viral inclusions are mainly found in macrophages in and around demyelinating lesions. Other cells are also infected, but to a lesser degree. In the neuronal system both axoplasmic and dendritic flow appear to facilitate the spread of virus in the CNS. In macrophages, the presence of virus particles and the association of virus with altered components of the cytoskeleton support active virus production rather than simple internalization. The macrophage appears to play an important role in both the establishment of virus persistence and in the process of demyelination in this animal model.