Background Free functional gracilis transfer (FFGT) is one of the most important methods for the treatment of total brachial plexus avulsion. However, postoperative adhesion and fibrosis of the transferred muscle compromise the effectiveness. This study is to investigate whether intact epimysium and FTY720 could reduce adhesion and fibrosis following FFGT in rabbits.Methods A total of 60 New Zealand White rabbits were randomly divided into 4 groups: Group 1 was set as control, and orthotopic gracilis transfer models were established in Group 2-4, with different interventions: epimysium resection (Group 2), epimysium preservation (Group 3) and epimysium preservation combined with FTY720 treatment (Group 4). After that, at each time points (1, 3, 7, 14, and 56 days postoperatively), three rabbits in each group were selected to harvest their gracilis and adjacent muscles for histological analysis including hematoxylin & eosin (HE) staining, Masson staining, and anti-transforming growth factor beta 1 (TGF-β1) immuno-histochemical staining. Additionally, the thickness of extragracilis adhesion band by ultrasonography were also assessed at days 56.Results All of HE, Masson and TGF-β1 stains confirmed that there were least inflammatory cell infiltration, adhesion and fibrosis of the transferred gracilis in Group 4 than those in Groups 2 and 3. At the 56 days postoperatively, the thickness of the adhesion band of gracilis was lightest in group 4 than that in Groups 2 and 3. Conclusions For the functional gracilis transfer, epimysium preservation and FTY720 could relieve the inflammatory response between gracilis and adjacent muscles, reduce the fibrosis and adhesion.