The piloneural collar in mammalian hairy skin comprises an intricate pattern of circumferential and longitudinal sensory afferents that innervate primary and secondary pelage hairs. The longitudinal afferents tightly associate with terminal Schwann cell processes to form encapsulated lanceolate nerve endings of rapidly adapting mechanoreceptors. The molecular basis for piloneural development, maintenance and function is poorly understood. Here, we show that Nefh-expressing glutamatergic neurons represent a major population of longitudinal and circumferential sensory afferents innervating the piloneural collar. Our findings using a VGLUT2 conditional-null mouse model indicate that glutamate is essential for innervation, patterning and differentiation of NMDAR(+) terminal Schwann cells during piloneural collar development. Similarly, treatment of adult mice with a selective NMDAR antagonist severely perturbed piloneural collar structure and reduced excitability of these mechanosensory neurons. Collectively, these results show that DRG-derived glutamate is essential for the proper development, maintenance and sensory function of the piloneural mechanoreceptor.