A large number of mutations in the human PLP1 gene lead to abnormal myelination and oligodendrocyte death in Pelizaeus-Merzbacher disease (PMD). Here we show that a major subgroup of PMD mutations that map into the extracellular loop region of PLP/DM20 leads to the failure of oligodendrocytes to form the correct intramolecular disulfide bridges. This leads to abnormal protein cross-links and endoplasmic reticulum retention and activates the unfolded protein response. Importantly, surface expression of mutant PLP/DM20 can be restored and the unfolded protein response can be reverted by the removal of two cysteines. Thus, covalent protein cross-links emerge as a cause, rather than as a consequence, of endoplasmic reticulum retention.