Fundamental questions arising from study of the multiple sclerosis lesion are: (1) why the myelin-forming oligodendrocyte is adversely affected; and (2) what factors might induce the proliferation and differentiation of replacement oligodendrocytes. This paper discusses factors that influence the number and differentiative capacity of myelin-forming cells both in the central nervous system (CNS) and the peripheral nervous system (PNS). New experiments utilizing cultures of fetal rat sensory and autonomic ganglia are also herein reported. It has been found that in cultures free of fibroblasts, normal Schwann cell proliferation and ensheathment of axons require contact with a collagen substrate and may be facilitated by a medium containing chick embryo extract. This demonstration of a connective tissue requirement for normal Schwann cell function raises the question of whether additional factors are necessary for normal oligodendrocyte activity.