Schwann cells, the myelinating cells of the peripheral nervous system, are derived from the neural crest. Once neural crest cells are committed to the Schwann cell fate, they can take on one of two phenotypes to become myelinating or nonmyelinating Schwann cells, a decision that is determined by interactions with axons. The critical step in the differentiation of myelinating Schwann cells is the establishment of a one-to-one relationship with axons, the so-called "promyelinating" stage of Schwann cell development. The transition from the promyelinating to the myelinating stage of development is then accompanied by a number of significant changes in the pattern of gene expression, including the activation of a set of genes encoding myelin structural proteins and lipid biosynthetic enzymes, and the inactivation of a set of genes expressed only in immature or nonmyelinating Schwann cells. These changes are regulated mainly at the transcriptional level and also require continuous interaction between Schwann cells and their axons. Two transcription factors, Krox 20 (EGR2) and Oct 6 (SCIP/Tst1), are necessary for the transition from the promyelinating to the myelinating stage of Schwann cell development. Krox 20, expressed in myelinating but not promyelinating Schwann cells, is absolutely required for this transition, and myelination cannot occur in its absence. Oct 6, expressed mainly in promyelinating Schwann cells and then downregulated before myelination, is necessary for the correct timing of this transition, since myelination is delayed in its absence. Neither Krox 20 nor Oct 6, however, is required for the initial activation of myelin gene expression. Although the mechanisms of Krox 20 and Oct 6 action during myelination are not known, mutation in Krox 20 has been shown to cause CMT1, further implicating this protein in the pathogenesis of this disease. Identifying the molecular mechanisms of Krox 20 and Oct 6 action will thus be important both for understanding myelination and for designing future treatments for CMT1. Point mutations in the genes encoding the myelin proteins PMP22 and P0 cause CMT1A without a gene duplication and CMT1B, respectively. Although the clinical and pathological phenotypes of CMT1A and CMT1B are similar, their molecular pathogenesis is quite different. Point mutations in PMP22 alter the trafficking of the protein, so that it accumulates in the endoplasmic reticulum (ER) and intermediate compartment (IC). Mutant PMP22 also sequesters its normal counterpart in the ER, further reducing the amount of PMP22 available for myelin synthesis at the membrane, and accounting, at least in part, for its severe effect on myelination. Mutant PMP22 probably also activates an ER-to-nucleus signal transduction pathway associated with misfolded proteins, which may account for the decrease of myelin gene expression in Schwann cells in Trembler mutant mice. In contrast, absence of expression of the homotypic adhesion molecule, P0, in mice in which the gene has been inactivated, produces a unique pattern of Schwann cell gene expression, demonstrating that P0 plays a regulatory as well as a structural role in myelination. Whether this role is direct, through a P0-mediated adhesion pathway, or indirect, through adhesion pathways mediated by cadherins or integrins, however, remains to be determined. The molecular mechanisms underlying dysmyelination in CMT1 are thus complex, with pleitropic effects on Schwann cell physiology that are determined both by the type of mutation and the protein mutated. Identifying these molecular mechanisms, however, are important both for understanding myelination and for designing future treatments for CMT1. Although demyelination is the hallmark of CMT1, the clinical signs and symptoms of this disease are probably produced by axonal degeneration, not demyelination. Interestingly, a number of recent studies have demonstrated that Schwann cells from Trembler mice or patients with CMT1A can induce local axonal abnormalities, including decreased axonal transport, and altered neurofilament phosphorylation. These data thus suggest that disability of patients with CMT1 is caused by abnormal Schwann cell-axonal interactions. Efforts both to understand the effects of myelinating Schwann cells on their axons and to prevent axonal degeneration or promote axonal regeneration are thus central for the future development of a rational molecular therapy for CMT1.