We generated transgenic mice that specifically express foreign genes in myelinating Schwann cells. A 1.1 kb segment of 5' flanking sequence from the rat P0 gene was used to drive expression of the genes encoding human growth hormone (hGH) and bacterial diphtheria toxin A chain (DT-A). The P0-hGH mice expressed hGH in myelinating Schwann cells, but not in nonmyelinating Schwann cells, the central nervous system, or any other tissue assayed. This expression was activated on a developmental schedule comparable to that of endogenous myelin gene expression. One line of P0-DT-A mice developed a generalized hypomyelinating peripheral neuropathy, with Schwann cell deficiency apparent in newborn animals. Peripheral nerves from adult mice of this line displayed morphological alterations ranging from completely denuded axons to myelinated Schwann cells undergoing degeneration, although occasional Schwann cells were able to form apparently normal myelin sheaths. Pronounced secondary changes, including proliferation and retraction of processes, occurred in the nonmyelinating Schwann cells of these P0-DT-A mice.