The myelin sheath is a multilayered membrane, unique to the nervous system, which functions as an insulator to increase greatly the velocity of axonal impulse conduction. We have used the techniques of differential screening and hybrid selection to identify a cDNA clone encoding the Schwann cell glycoprotein P0, the major structural protein of the peripheral myelin sheath. The sequence of this protein, deduced from the nucleotide sequence of the cloned cDNA, indicates that P0 is an integral membrane protein containing a single membrane-spanning region, a large hydrophobic extracellular domain, and a smaller basic intracellular domain. The structure of the protein suggests that each of these domains plays an essential role in generating the highly ordered structure of the myelin sheath. Furthermore, we find that the induction of P0 mRNA coincides with the initiation of myelin formation, and we propose a model in which the glycoprotein serves as a molecular guidepost for this process.