Myelin-forming oligodendrocytes facilitate saltatory nerve conduction and support neuronal functions in the mammalian CNS. Although the processes of oligodendrogliogenesis and differentiation from neural progenitor cells have come to light in recent years, the molecular mechanisms underlying oligodendrocyte myelinogenesis are poorly defined. Herein, we demonstrate the pivotal role of the basic helix-loop-helix transcription factor, Olig1, in oligodendrocyte myelinogenesis in brain development. Mice lacking a functional Olig1 gene develop severe neurological deficits and die in the third postnatal week. In the brains of these mice, expression of myelin-specific genes is abolished, whereas the formation of oligodendrocyte progenitors is not affected. Furthermore, multilamellar wrapping of myelin membranes around axons does not occur, despite recognition and contact of axons by oligodendrocytes, and Olig1-null mice develop widespread progressive axonal degeneration and gliosis. In contrast, myelin sheaths are formed in the spinal cord, although the extent of myelination is severely reduced. At the molecular level, we find that Olig1 regulates transcription of the major myelin-specific genes, Mbp, Plp1, and Mag, and suppresses expression of a major astrocyte-specific gene, Gfap. Together, our data indicate that Olig1 is a central regulator of oligodendrocyte myelinogenesis in brain and that axonal recognition and myelination by oligodendrocytes are separable processes.