Galactosylceramide ("galactocerebroside"; GalC) is a major glycolipid in the myelin sheath of the CNS and the PNS. The enzyme UDP-galactose:ceramide galactosyltransferase (CGalT) catalyzes the final step of the synthesis of GalC: the transfer of galactose to ceramide. By a differential screening approach, we have isolated a cDNA, the sequence of which is identical to the recently isolated cDNA clones for CGalT. By nothern analysis and in situ hybridization we demonstrated that CGalT mRNA is expressed at birth in oligodendrocytes and Schwann cells, an expression pattern corresponding to the onset of myelination. In addition to the high expression levels of CGalT in oligodendrocytes and Schwann cells, in situ hybridization also showed expression in subtypes of neurons in spinal cord, cerebellum, and brain-stem in the adult CNS, but at a much lower level than in oligodendrocytes. Expression of CGalT in COS cells demonstrated that CGalT has a preference for hydroxyceramide as a substrate. CGalT-expressing COS cells synthesize and transport GalC to their cell surface as shown by immunofluorescence and by lipid analysis of living cells. Our results suggested that the CGalT specifically uses hydroxyceramide for the synthesis of GalC and that separate (co)enzymes are not needed.