Denise V. Schley, 86, who served as an Army nurse in France during World War I and as head of the American Red Cross in Panama in the 1930s, died of pneumonia Thursday at Georgetown University Hospital.

Mrs. Schley, who was born in Woburn, Mass., was the wife of retired Army Maj. Gen. Julian L. Schley, who also served in France in World War I and who later became governor of the Panama Canal Zone and chief of the Army Corps of Engineers.

From 1932 to 1936, when Gen. Schley was governor of the Canal Zone, Mrs. Schley was head of the American Red Cross there. In 1937, she and her husband came to Washington, when he was appointed chief of Army Engineers, a position he held until his military retirement in 1941. He died in 1965.

Mrs. Schley was a former president of the Women's Army and Navy League. She was a member of the board of managers of the Washington Home for Incurables, now the Washington Home, and a former chairman and member of the grounds committee of the Washington Cathedral.

During World War II, when her husband was recalled to active duty, she was vice chairman of Special Services for the Red Cross in Savannah, Ga. She and her husband returned to Washington in 1945.

Mrs. Schley was a member of the Chevy Chase and Sulgrave Clubs, the Army & Navy Club, the Georgetown Garden Club and Citizens Association and the Garden Club of America. She was an honorary member of the Corps of Engineers Officers Wives Club. She attended Christ Episcopal Church here.

There are no immediate survivors.