Schwann cells promote the regrowth of nerve fibers in both the PNS and CNS and might thus be of value in strategies to promote repair following injury or demyelination in the CNS. The effectiveness of Schwann cells in promoting repair could, however, be limited by interactions with reactive astrocytes that are prominent at lesioned and demyelinated sites. To investigate this possibility, experiments were performed to determine the influence of cortical astrocytes on Schwann cell proliferation and myelination of dorsal root ganglion (DRG) neurons in vitro. DRG neurons from embryonic rats and Schwann cells, astrocytes, and fibroblasts isolated from the sciatic nerve, cerebral cortex, and cranial periosteum, respectively, of neonatal rats were purified and then recombined to provide neuron-Schwann cell, neuron-Schwann cell-astrocyte, and neuron-Schwann cell-fibroblast cultures. Astrocytes inhibited both neuron-dependent Schwann cell proliferation and the myelination of axons by Schwann cells. The expression of galactocerebroside, but not of the O4 antigen, was inhibited by astrocytes, suggesting that astrocytes blocked Schwann cell differentiation prior to the onset of myelination. Ultrastructural analysis of the cultures also indicated that both axonal ensheathment and the segregation of large axons into 1:1 relationships were decreased in the presence of astrocytes. Astrocytes did not affect the expression of the basal lamina components type IV collagen and laminin, and basal lamina formation assessed by electron microscopy was only slightly decreased. Some of these inhibitory effects appear to be mediated by diffusible factors since astrocyte-conditioned medium also reduced Schwann cell myelination. Fibroblasts or fibroblast-conditioned medium did not induce such inhibitory effects, indicating that the effects were astrocyte specific. We conclude that cortical astrocytes release a soluble factor(s) that inhibits specific aspects of neuron- Schwann cell interactions leading to myelination.