At present, an intensive effort for prevention of neuroma formation following peripheral nerve section continues. It has been recently suggested that surgical pinealectomy (Px) induces elevation of the collagen content in the granulation tissue of a wound, while melatonin application after Px suppresses elevation of the collagen accumulation in the tissue. The aim of the present study was to assess whether melatonin had the ability to suppress collagen production and neuroma formation following peripheral nerve transection. A total of 40 male rats (four groups of 10) were left intact (intact controls) or sham operated (sham group), were Px, or were Px and given melatonin (Px + melatonin group). All animals underwent a surgical intervention consisting of right sciatic nerve neurectomy. After 4 wk, the animals were killed following intracardiac perfusion. Gross morphology of neuroma formation in the proximal nerve segment was examined and proximal neuroma evaluated. Macroscopic and microscopic findings revealed that Px caused a proliferation of connective tissue and large neuroma formation at the proximal ends of transected nerves. Stereological analysis showed that there was a statistically significant reduction in connective tissue content of the same region in Px animals treated with melatonin (P < 0.005). The results achieved in a rodent model of sciatic nerve neuroma formation showed that there was a positive correlation between macroscopic and microscopic observations, and that melatonin enhanced axonal regeneration presumably due to its inhibitory effect on neuroma formation.