Neuregulins comprise a family of epidermal growth factor-like ligands that interact with ErbB receptor tyrosine kinases to control many aspects of neural development. One of the most dramatic effects of neuregulin-1 is on glial cell differentiation. The membrane-bound neuregulin-1 type III isoform is an axonal ligand for glial ErbB receptors that regulates the early Schwann cell lineage, including the generation of precursors. Recent studies have shown that the amount of neuregulin-1 type III expressed on axons also dictates the glial phenotype, with a threshold level triggering Schwann cell myelination. Remarkably, neuregulin-1 type III also regulates Schwann cell membrane growth to adjust myelin sheath thickness to match axon caliber precisely. Whether this signaling system operates in central nervous system myelination remains an open question of major importance for human demyelinating diseases.