Myelin is a multispiraled extension of glial membrane that surrounds axons. How glia extend a surface many-fold larger than their body is poorly understood. Schwann cells are peripheral glia and insert radial cytoplasmic extensions into bundles of axons to sort, ensheath, and myelinate them. Laminins and beta1 integrins are required for axonal sorting, but the downstream signals are largely unknown. We show that Schwann cells devoid of beta1 integrin migrate to and elongate on axons but cannot extend radial lamellae of cytoplasm, similar to cells with low Rac1 activation. Accordingly, active Rac1 is decreased in beta1 integrin-null nerves, inhibiting Rac1 activity decreases radial lamellae in Schwann cells, and ablating Rac1 in Schwann cells of transgenic mice delays axonal sorting and impairs myelination. Finally, expressing active Rac1 in beta1 integrin-null nerves improves sorting. Thus, increased activation of Rac1 by beta1 integrins allows Schwann cells to switch from migration/elongation to the extension of radial membranes required for axonal sorting and myelination.