Myelin consists of several layers of tightly compacted membranes wrapped around axons in the nervous system. The main function of myelin is to provide electrical insulation around the axon to ensure the rapid propagation of nerve conduction. As the myelinating glia terminally differentiates, they begin to produce myelin membranes on a remarkable scale. This membrane is unique in its composition being highly enriched in lipids, in particular galactosylceramide and cholesterol. In this review we will summarize the role of cholesterol in myelin biogenesis in the central and peripheral nervous system.