The specific axonal and Schwann cell surface molecules that mediate the initiation of myelination have not been identified. We have used cocultures of purified rat dorsal root ganglion neurons and Schwann cells and purified polyclonal antibodies to the L1 adhesion molecule to study the role of L1 in myelin formation. Schwann cells were first arrested in a basal-lamina-free premyelination stage (by serum/ascorbate deprivation), then manipulated to allow basal lamina deposition and myelination (by serum/ascorbate addition) in the absence or presence of anti-L1. Using electron microscopy, immunocytochemistry, and myelin sheath quantitation after Sudan-black staining, we determined the effect of anti-L1 on (1) basal lamina formation, (2) the segregation by Schwann cells of axons into a 1:1 relationship, (3) galactocerebroside (Gal-C) expression, (4) laminin deposition, and (5) myelin formation. Anti-L1 strongly blocked myelin formation, Gal-C expression, and axon segregation but did not block basal lamina formation. In controls, elongated Schwann cell processes completely covered the axons and exhibited uniform surface staining for laminin; in anti-L1-treated cultures, shortened Schwann cells, intensely stained for laminin, were observed in clusters separated by unstained lengths of axons. When 50 micrograms/ml exogenous purified laminin was added to the medium, Schwann cell length and laminin staining were similar in control and treated cultures. However, the inhibition of myelination of anti-L1 was not altered by the addition of laminin. Myelination was also inhibited with antigen-binding fragments (Fab) of polyclonal anti- L1, but an antibody to liver membranes did not block myelination. These results indicate that L1 is involved in the linear extension of Schwann cell processes along axons, the engulfment of axons, and the induction of myelin-specific components within the Schwann cell. We conclude that anti-L1 prevents myelination by blocking these events rather than by blocking basal lamina deposition.