Localized hypertrophic mononeuropathy (LHM) is a rare foccal neuropathy associated with perineurial cell proliferation due to an undefined stimulus. We report a case of LHM involving the proximal ulnar nerve in a 13-year-old boy. Serial clinical and electrophysiological observations were done, including intraoperative recordings directly from the nerve on two occasions. The evolution of abnormalities, as documented by electrophysiological and immunohistochemical studies, is compatible with a process of progressive thinning of myelin sheaths, culminating in axonal degeneration in later stages. Intraoperative recording of nerve action potentials was used to guide surgical management of the lesion. Ultimately, there was a good clinical and electrophysiological response to resection of the lesion and sural nerve fascicular grafting.