Schwann cell myelination requires interactions with the extracellular matrix (ECM) mediated by cell surface receptors. Previously, we identified a type V collagen family member, alpha4(V) collagen, which is expressed by Schwann cells during peripheral nerve differentiation. This collagen binds with high affinity to heparan sulfate through a unique binding motif in the noncollagenous N-terminal domain (NTD). The principal alpha4(V) collagen-binding protein on the Schwann cell surface is the heparan sulfate proteoglycan glypican-1. We investigated the role of alpha4(V) collagen and glypican-1 in Schwann cell terminal differentiation in cultures of Schwann cells and dorsal root ganglion neurons. Small interfering RNA-mediated suppression of glypican-1 expression decreased binding of alpha4(V)-NTD to Schwann cells, adhesion and spreading of Schwann cells on alpha4(V)-NTD, and incorporation of alpha4(V) collagen into Schwann cell ECM. In cocultures, alpha4(V) collagen coassembles with laminin on the surface of polarized Schwann cells to form tube-like ECM structures that are sites of myelination. Suppression of glypican-1 or alpha4(V) collagen expression significantly inhibited myelination. These results demonstrate an important role for these proteins in peripheral nerve terminal differentiation.