The formation of myelin requires a series of complex signaling events initiated by the axon to surrounding glial cells, which ultimately respond by tightly wrapping the axon with layers of specialized plasma membrane thereby allowing for saltatory conduction. Activation of the transcription factor NF-kappaB in Schwann cells has been suggested to be critical for these cells to differentiate into a myelinating phenotype; however, the mechanisms by which it is activated have yet to be elucidated. Here, we demonstrate that axonal membranes are sufficient to promote NF-kappaB activation in cultured Schwann cells and identify neuregulin 1 (NRG1), specifically the membrane-bound type III isoform, as the signal responsible for activating this transcription factor. Surprisingly, neither membrane-bound type I nor the soluble NRG1 EGF domain could activate NF-kappaB, indicating that type III induces a qualitatively unique signal. The transcriptional activity of NF-kappaB was significantly enhanced by treatment with forskolin, indicating these two signals converge for maximal activation. Both ErbB2 and -3 receptors were required for transducing the NRG1 signal, because gene deletion of ErbB3 in Schwann cells or treatment with the ErbB2 selective inhibitor, PKI-166, prevented the stimulation of NF-kappaB by axonal membranes. Finally, PKI-166 blocked the activation of the transcription factor in myelinating neuron/Schwann cell co-cultures and in vivo, in developing sciatic nerves. Taken together, these data establish NRG1 type III as the activator of NF-kappaB during myelin formation.