Background: The treatment of large peripheral nerve defect in scarred tissue is still a major challenge. Two-stage grafting with preparation of a smooth bed before grafting is a technique used for tendon or bone defects in the past. We are now reporting such a technique for large scarred gaps in the sciatic nerves of rat.Methods: In each of the 20 female Wister rats, 15 centimeters of the sciatic nerve was excised. The nerve bed was then covered by tetracycline powder to induce scar tissue formation. In half of the rats a silicone tube was sutured into the nerve ends to produce a smooth tunnel for a two-stage grafting. In the second group the cut nerve ends were covered by silicone caps. After 4 weeks each rat received nerve grafting of its sciatic nerve defect from its bilateral median nerves. 15 weeks following the grafting the rats were tested for their sciatic nerve functions, then the nerves were excised for histological evaluation of the nerve regeneration and the scar tissue.Results: The motor and sensory motor function recovery of the nerves, as measured by “External Postural Thrust”, and “Withdrawal Reflex Latency”, were greater in the group that had the grafts replacing the silicone tubes. The histological evaluation also confirmed the presence of more nerve fibers and less scarring in the silicone tube treated group.Conclusions: Two-stage nerve grafting in severely scarred bed can improve the functional results of a nerve graft.