To investigate the production of steroid hormones by Schwann cells and to examine the regulation of steroid hormone production during myelination, cultures of rat Schwann cells were differentiated into their myelinating phenotype in the absence of neurons with dibutyryl cAMP (db-cAMP). During this process, the expression of P450scc (involved in steroid biosynthesis) was elevated at both the mRNA and protein levels as evident in RT-PCR, Western blots, and immunostaining. Labeling of the cells with [14C] acetate revealed enhanced production of pregnenolone during differentiation into the myelinating phenotype. Disruption of P450scc's activity with an inhibitor diminished the extent of differentiation into the myelinating phenotype as levels of mRNA and protein expression of myelin protein zero (P0) declined. However, the effect was reversed with the addition of pregnenolone. Furthermore, when the differentiating cultures were treated with pregnenolone, mRNA expression of P0 was upregulated, suggesting the stimulation of the differentiation process. Together, these results provide evidence for Schwann cells as a major producer of steroid hormones and pregnenolone production by P450scc as an important regulatory step during myelination.