The use of artificial nerve conduit containing viable Schwann cells is one of the most promising strategies to repair the peripheral nerve injury. To fabricate an effective nerve conduit whose microstructure and internal environment are more favorable in the nerve regeneration than existing ones, a new three-dimensional Schwann cell culture technique using $Matrigel^{(R)}$. and dorsal root ganglion (DRG) was developed. Nerve conduit of three-dimensionally arranged Schwann cells was fabricated using direct seeding of freshly harvested DRG into a $Matrigel^{(R)}$ filled silicone tube (I.D. 1.98 mm, 14 mm length) and in vitro rafting culture for 2 weeks. The nerve regeneration efficacy of three-dimensionally cultured Schwann cell conduit (3D conduit group, n=6) was assessed using SD rat sciatic nerve defect of 10 mm, and compared with that of silicone conduit filled with $Matrigel^{(R)}$ and Schwann cells prepared from the conventional plain culture method (2D conduit group, n=6). After 12 weeks, sciatic function was evaluated with sciatic function index (SFI) and gait analysis, and histomorphology of nerve conduit and the innervated tissues of sciatic nerve were examined using image analyzer and electromicroscopic methods. The SFI and ankle stance angle (ASA) in the functional evaluation were $-60.1{pm}13.9$, $37.9^{circ}{pm}5.4^{circ}$ in 3D conduit group (n=5) and $-87.0{pm}12.9$, $32.2^{circ}{pm}4.8^{circ}$ in 2D conduit group (n=4), respectively. And the myelinated axon was $44.91%{pm}0.13%$ in 3D conduit group and $13.05%{pm}1.95%$ in 2D conduit group to the sham group. In the TEM study, 3D conduit group showed more abundant myelinated nerve fibers with well organized and thickened extracellular collagen than 2D conduit group, and gastrocnemius muscle and biceps femoris tendon in 3D conduit group were less atrophied and showed decreased fibrosis with less fatty infiltration than 2D conduit group. In conclusion, new three-dimensional Schwann cell culture technique was established, and nerve conduit fabricated using this technique showed much improved nerve regeneration capacity than the silicone tube filled with $Matrigel^{(R)}$ and Schwann cells prepared from the conventional plain culture method.