Sensory neurons in the PNS demonstrate substantial capacity for regeneration following injury. Recent studies have identified changes in the transcriptome of sensory neurons, which are instrumental for axon regeneration. The role of Schwann cells (SCs) in mediating these changes remains undefined. We tested the hypothesis that SCs regulate expression of genes in sensory neurons before and after PNS injury by comparing mice in which LDL Receptor‐related Protein‐1 (LRP1) is deleted in SCs (scLRP1^−/− mice) with wild‐type (scLRP1^+/+) littermates. LRP1 is an endocytic and cell‐signaling receptor that is necessary for normal SC function and the SC response to nerve injury. scLRP1^−/− mice represent a characterized model in which the SC response to nerve injury is abnormal. Adult DRG neurons, isolated from scLRP1^−/− mice, with or without a conditioning nerve lesion, demonstrated increased neurite outgrowth when cultured ex vivo, compared with neurons from wild‐type mice. Following sciatic nerve crush injury, nerve regeneration was accelerated in vivo in scLRP1^−/− mice. These results were explained by transcriptional activation of RAGs in DRG neurons in scLRP1^−/− mice prior to nerve injury. Although the presence of abnormal SCs in scLRP1^−/− mice primed DRG neurons for repair, nerve regeneration in scLRP1^−/− mice resulted in abnormalities in ultrastructure, principally in Remak bundles, and with the onset of neuropathic pain. These results demonstrate the importance of SCs in controlling RAG expression by neurons and the potential for this process to cause chronic pain when abnormal. The SC may represent an important target for preventing pain following PNS injury.