Chronic sciatic nerve constriction injury (CCI) induces Wallerian degeneration and exaggerated pain‐like behaviors. These effects are mediated in large part by pro‐inflammatory cytokines, such as tumor necrosis factor alpha (TNF‐α). In this study, we demonstrate that systemically administered recombinant human erythropoietin (rhEpo) facilitates recovery from chronic neuropathic pain associated with CCI in rats. Because TNF‐α has been implicated in the development of pain‐related behaviors, we measured TNF‐α mRNA at the nerve injury site. Systemically or locally administered rhEpo decreased TNF‐α mRNA, compared with that observed in untreated animals. RhEpo also significantly (P < 0.05) decreased axonal degeneration. Immunohistochemistry of CCI nerve showed abundant TNF‐α in Schwann cells, axoplasm and macrophages. In rhEpo‐treated animals, TNF‐α immunopositivity was decreased selectively in Schwann cells. These results suggest a model in which rhEpo counteracts the effects of TNF‐α in CCI by blocking expression of TNF‐α in Schwann cells. To further test this model, we studied primary Schwann cell cultures. RhEpo inhibited TNF‐α expression in response to lipopolysaccharide, supporting the conclusions of our in vivo CCI experiments. In addition, rhEpo directly counteracted Schwann cell death induced by exogenously added TNF‐αin vitro. These results indicated that rhEpo regulates TNF‐α by multiple mechanisms; rhEpo regulates TNF‐α mRNA expression by Schwann cells but also may directly counteract TNF‐α signaling pathways that lead to injury, chronic pain and/or death.