Globally, peripheral nerve injury (PNI) is a common clinical issue. Successfully repairing severe PNIs has posed a major challenge for clinicians. GW3965 is a highly selective LXR agonist, and previous studies have demonstrated its positive protective effects in both central and peripheral nerve diseases. In this work, we examined the potential reparative effects of GW3965-loaded polylactic acid co-glycolic acid microspheres in conjunction with a chitosan nerve conduit for peripheral nerve damage. The experiment revealed that GW3965 promoted Schwann cell proliferation and neurotrophic factor release in vitro. In vivo experiments conducted on rats showed that GW3965 facilitated the restoration of motor function, promoted axon and myelin regeneration in the sciatic nerve, and enhanced the microenvironment of nerve regeneration. These results offer a novel therapeutic approach for the healing of nerve damage. Overall, this work provides valuable insights and presents a promising therapeutic strategy for addressing PNI.