Low levels of survival of motor neuron (SMN) protein lead to spinal muscular atrophy (SMA). The major pathological hallmark of SMA is a loss of lower motor neurons from spinal cord and peripheral nerve. However, recent studies have revealed pathological changes in other cells and tissues of the neuromuscular system. Here, we demonstrate intrinsic, SMN-dependent defects in Schwann cells in SMA. Myelination in intercostal nerves was perturbed at early- and late-symptomatic stages of disease in two mouse models of SMA. Similarly, maturation of axo-glial interactions at paranodes was disrupted in SMA mice. In contrast, myelination of motor axons in the corticospinal tract of the spinal cord occurred normally. Schwann cells isolated from SMA mice had significantly reduced levels of SMN and failed to express key myelin proteins following differentiation, likely due to perturbations in protein translation and/or stability rather than transcriptional defects. Myelin protein expression was restored in SMA Schwann cells following transfection with an SMN construct. Co-cultures of healthy neurons with diseased Schwann cells revealed deficient myelination, suggestive of intrinsic defects in Schwann cells, as well as reduced neurite stability. Alongside myelination defects, SMA Schwann cells failed to express normal levels of key extracellular matrix proteins, including laminin α2. We conclude that Schwann cells require high levels of SMN protein for their normal development and function in vivo, with reduced levels of SMN resulting in myelination defects, delayed maturation of axo-glial interactions and abnormal composition of extracellular matrix in peripheral nerve.