Axonal degeneration contributes to permanent neurological disability in inherited and acquired diseases of myelin. Mitochondrial dysfunction has been proposed as a major contributor to this axonal degeneration. It remains to be determined, however, if myelination, demyelination, or remyelination alter the size and distribution of axonal mitochondrial stationary sites or the rates of axonal mitochondrial transport. Using live myelinated rat dorsal root ganglion (DRG) cultures, we investigated whether myelination and lysolecithin-induced demyelination affect axonal mitochondria. Myelination increased the size of axonal stationary mitochondrial sites by 2.3-fold. After demyelination, the size of axonal stationary mitochondrial sites was increased by an additional 2.2-fold and the transport velocity of motile mitochondria was increased by 47%. These measures returned to the levels of myelinated axons after remyelination. Demyelination induced activating transcription factor 3 (ATF3) in DRG neurons. Knockdown of neuronal ATF3 by short hairpin RNA abolished the demyelination-induced increase in axonal mitochondrial transport and increased nitrotyrosine immunoreactivity in axonal mitochondria, suggesting that neuronal ATF3 expression and increased mitochondrial transport protect demyelinated axons from oxidative damage. In response to insufficient ATP production, demyelinated axons increase the size of stationary mitochondrial sites and thereby balance ATP production with the increased energy needs of nerve conduction.