Schwann cell (SC) migration is an important step preceding myelination and remyelination in the peripheral nervous system, and can be promoted by peptide factors like neuregulins. Here we present evidence that a lipid factor, lysophosphatidic acid (LPA), influences both SC migration and peripheral myelination through its cognate G protein-coupled receptor (GPCR) known as LPA1 . Ultrastructural analyses of peripheral nerves in mouse null-mutants for LPA1 showed delayed SC-to-axon segregation, polyaxonal myelination by single SCs, and thinner myelin sheaths. In primary cultures, LPA promoted SC migration through LPA1 , while analysis of conditioned media from purified dorsal root ganglia neurons using HPLC/MS supported the production of LPA by these neurons. The heterotrimeric G-alpha protein, Gαi , and the small GTPase, Rac1, were identified as important downstream signaling components of LPA1 . These results identify receptor mediated LPA signaling between neurons and SCs that promote SC migration and contribute to the normal development of peripheral nerves through effects on SC-axon segregation and myelination.