Myelin in the mammalian nervous system has a high concentration of galactolipids [galactosylceramide (GalCer) and sulfatide] with 2-hydroxy fatty acids. We recently reported that fatty acid 2-hydroxylase (FA2H), encoded by the FA2H gene, is the major fatty acid 2-hydroxylase in the mouse brain. In this report, we show that FA2H also plays a major role in the formation of 2-hydroxy galactolipids in the peripheral nervous system. FA2H mRNA and FA2H activity in the neonatal rat sciatic nerve increased rapidly during developmental myelination. The contents of 2-hydroxy fatty acids were approximately 5% of total galactolipid fatty acids at 4 days of age and increased to 60% in GalCer and to 35% in sulfatides at 60 days of age. The chain length of galactolipid fatty acids also increased significantly during myelination. FA2H expression in cultured rat Schwann cells was highly increased in response to dibutyryl cyclic AMP, which stimulates Schwann cell differentiation and upregulates myelin genes, such as UDP-galactose:ceramide galactosyltransferase and protein zero. These observations indicate that FA2H is a myelination-associated gene. FA2H-directed RNA interference (RNAi) by short-hairpin RNA expression resulted in a reduction of cellular 2-hydroxy fatty acids and 2-hydroxy GalCer in D6P2T Schwannoma cells, providing direct evidence that FA2H-dependent fatty acid 2-hydroxylation is required for the formation of 2-hydroxy galactolipids in peripheral nerve myelin. Interestingly, FA2H-directed RNAi enhanced the migration of D6P2T cells, suggesting that, in addition to their structural role in myelin, 2-hydroxy lipids may greatly influence the migratory properties of Schwann cells.