The paper presents a study of various aspects of propagation in the TM01mode along a dielectric‐rod waveguide immersed in plasma. Expressions are derived and characteristics obtained for the dispersion relation, phase and group velocities, as well as power flow in and around the guide in the loss‐free case of propagation. The dispersion relation reveals that the TM01mode is the dominant one with backward wave characteristics for low negative values of &egr;p/&egr;d, where &egr;pand &egr;dare the dielectric constants of the plasma and the rod, respectively. The phase velocity is found to be always greater than the velocity of a plane wave in the rod medium if &egr;pis positive, while for its negative values the phase velocity can be either greater or less. From the point of view of power concentration, the structure acts as a very good surface waveguide, particularly for high negative values of &egr;p/&egr;d. The attenuation coefficient is subsequently derived by the standard perturbation method, assuming that both the plasma and the rod are slightly lossy. Finally, the possibility of using the waveguide as a plasma diagonostic tool is discussed, and it is shown how the results reported in the paper can be employed for determining the electron density and electron collision frequency for momentum transfer in a plasma.