Schwann cell-axon interactions in the development, maintenance, and regeneration of the normal peripheral nervous system are complex. A previously described transgene-induced insertional mutation (BPFD#36), now referred to as Enervated (Enr), results in disrupted Schwann cell- axon interactions. In this report, after a crush or transection injury to Enr peripheral nerves, we demonstrate impaired nerve regeneration. There are fewer myelinated fibers per mm2 and thinner myelin sheaths surrounding regenerating axons in the nerves of homozygous mutant mice compared to wild type mice at 28 d after crush injury to the sciatic nerve. Abnormal Schwann cell-axon interactions remain in Enr/Enr animals as evidenced by the relatively frequent ultrastructural finding of unmyelinated large diameter axons in the regenerating nerves. Additionally, nerve graft experiments indicate that the impairment in regeneration is due to a Schwann cell defect. Morphologic and morphometric findings in conjunction with molecular analysis of regenerating nerves suggest that the Enr defect causes a disruption in the ability of “early ” Schwann cells to differentiate to a more mature phenotype. In mutant homozygous and wild type nerves at 7 d after crush injury there are similar levels of mRNA for the low-affinity nerve growth factor receptor, but in the mutant homozygous regenerating nerves there is 11-fold less mRNA for glial fibrillary acidic protein, a more mature phenotypic marker of Schwann cells. This Schwann cell differentiation defect likely accounts for both the peripheral neuropathy and impaired nerve regeneration observed in Enr mice.