To provide a more permissive environment for axonal regeneration, Schwann cells (SCs) were introduced into a collagen-chitosan scaffold with longitudinally oriented micro-channels (L-CCH). The SC-seeded scaffold was then used for reconstruction of a 15-mm-long sciatic nerve defect in rats. The axonal regeneration and functional recovery were examined by a combination of walking track analysis, electrophysiological assessment, Fluoro-Gold retrograde tracing, as well as morphometric analyses to both regenerated axons and target muscles. The findings showed that SCs adhered and migrated into the L-CCH scaffold and displayed a longitudinal arrangement in vitro. Axonal regeneration as well as functional recovery was in the similar range between SCs-seeded scaffold and autograft groups, which were superior to those in L-CCH scaffold alone group. These indicate that the SCs-seeded L-CCH scaffold, which resembles the microstructure as well as the permissive environment of native peripheral nerves, holds great promise in nerve regeneration therapies.