Chaetae are continually being replaced during the life of a polychaete, but the process of chaetal degeneration during replacement is still poorly known. Chaetal loss occurs either one at a time through special degenerative sites, or all chaetae in a chaetal sac are lost simultaneously in the absence of degenerative sites. Old chaetae can be either resorbed inside the coelom or shed. This study describes chaetal degradation, loss, and subsequent replacement during experimentally induced regeneration in the sabellid polychaete Pseudopotamilla reniformis. During post-traumatic regeneration in P. reniformis, abdominal-type chaetae fall from the chaetal sac simultaneously without degenerative sites, and are replaced by thoracic-type chaetae. Chaetal sac degradation occurs in three main stages: (1) formation of numerous lysosomes and small electron-transparent vesicles in follicle cell cytoplasm; (2) disintegration of follicular cell membranes; and (3) disintegration of follicular cell cytoplasm. Description of changes during parapodial transformation allows identification of signs of degradation that can serve as histological indicators of chaetal degeneration in a wide range of polychaetes. Our study suggests that chaetal degeneration and loss in polychaetes can occur either with degenerative sites or without them, depending on the type of chaetal replacement.