Closed fractures may be complicated by associated peripheral nerve injury. However, because clinical information is limited, determining the best course of treatment is difficult. Most patients with closed fractures have a local nerve injury without nerve division; their prognosis for recovery is favorable. In the acute setting, immediate surgery is usually unwarranted because of the difficulty in accurately defining the severity and extent of nerve injury. When débridement of an open fracture or repair is not required, peripheral nerve injuries are best observed and the extremity treated with splinting and exercise to prevent loss of joint motion. Patients who fail to demonstrate signs of recovery at 6 months, either clinically or with electrodiagnostic testing, should undergo exploration to maximize the likelihood for return of function. When, during exploration, the nerve is in continuity, intraoperative measurement of nerve action potentials should be done. Measuring nerve action potentials will determine whether nerve grafting, local neurolysis, or excision of the injured segment, accompanied by primary repair, is the most appropriate treatment.