Failure of remyelination is largely responsible for sustained neurologic symptoms in multiple sclerosis (MS). MS lesions contain hyaluronan deposits that inhibit oligodendrocyte precursor cell (OPC) maturation. However, the mechanism behind this inhibition is unclear. We report here that Toll-like receptor 2 (TLR2) is expressed by oligodendrocytes and is up-regulated in MS lesions. Pathogen-derived TLR2 agonists, but not agonists for other TLRs, inhibit OPC maturation in vitro. Hyaluronan-mediated inhibition of OPC maturation requires TLR2 and MyD88, a TLR2 adaptor molecule. Ablated expression of TLR2 also enhances remyelination in a lysolecithin animal model. Hyaluronidases expressed by OPCs degrade hyaluronan to hyaluronan oligomers, a requirement for hyaluronan/TLR2 signaling. MS lesions contain both TLR2(+) oligodendrocytes and low-molecular-weight hyaluronan, consistent with their importance to remyelination in MS. We thus have defined a mechanism controlling remyelination failure in MS where hyaluronan is degraded by hyaluronidases into hyaluronan oligomers that block OPC maturation and remyelination through TLR2-MyD88 signaling.