If you know the difference between breath and breathe, then you should be comfortable with sheath and sheathe. Like breath, sheath is only a noun. It means (1) a case for a blade, or (2) a close-fitting dress (and there are a few less common senses that most of us will never have to use). Like breathe, sheathe is always a verb. It means to insert something into a sheath. Its opposite is unsheathe.
Multiple sclerosis is defined as a chronic progressive nervous disorder involving loss of myelin sheath around certain nerve fibres. [Healthcare Today]
Health begins to return as soon as you sheathe your sword. [AV Club]
A hunting knife in a sheath, a ski mask, glasses and a full can of soda were found Friday in a yard in the 1400 block of Hiatt Street. [Albany Democrat Herald]
Never one to sheathe his message in “double entendres” and fuckwittery, Roger Miret’s songwriting on Gotta Get Up Now is simple, succinct and pointed. [Seattle Post-Intelligencer]