Fast axonal conduction depends on myelin, which is formed by Schwann cells in the PNS. We found that the transcription factor Yin Yang 1 (YY1) is crucial for peripheral myelination. Conditional ablation of Yy1 in the Schwann cell lineage resulted in severe hypomyelination, which occurred independently of altered Schwann cell proliferation or apoptosis. In Yy1 mutant mice, Schwann cells established a 1:1 relationship with axons but were unable to myelinate them. The Schwann cells expressed low levels of myelin proteins and of Egr2 (also called Krox20), which is an important regulator of peripheral myelination. In vitro, Schwann cells that lacked Yy1 did not upregulate Egr2 in response to neuregulin1 and did not express myelin protein zero. This phenotype was rescued by overexpression of Egr2. In addition, neuregulin-induced phosphorylation of YY1 was required for transcriptional activation of Egr2. Thus, YY1 emerges as an important activator of peripheral myelination that links neuregulin signaling with Egr2 expression.