Notch signaling is central to vertebrate development, and analysis of Notch has provided important insights into pathogenetic mechanisms in the CNS and many other tissues. However, surprisingly little is known about the role of Notch in the development and pathology of Schwann cells and peripheral nerves. Using transgenic mice and cell cultures, we found that Notch has complex and extensive regulatory functions in Schwann cells. Notch promoted the generation of Schwann cells from Schwann cell precursors and regulated the size of the Schwann cell pool by controlling proliferation. Notch inhibited myelination, establishing that myelination is subject to negative transcriptional regulation that opposes forward drives such as Krox20. Notably, in the adult, Notch dysregulation resulted in demyelination; this finding identifies a signaling pathway that induces myelin breakdown in vivo. These findings are relevant for understanding the molecular mechanisms that control Schwann cell plasticity and underlie nerve pathology, including demyelinating neuropathies and tumorigenesis