In dystrophic mice, a model of merosin‐deficient congenital muscular dystrophy, laminin‐2 mutations produce peripheral nerve dysmyelination and render Schwann cells unable to sort bundles of axons. The laminin receptor and the mechanism through which dysmyelination and impaired sorting occur are unknown. We describe mice in which Schwann cell‐specific disruption of beta1 integrin, a component of laminin receptors, causes a severe neuropathy with impaired radial sorting of axons. Beta1‐null Schwann cells populate nerves, proliferate, and survive normally, but do not extend or maintain normal processes around axons. Interestingly, some Schwann cells surpass this problem to form normal myelin, possibly due to the presence of other laminin receptors such as dystroglycan and α6β4 integrin. These data suggest that PI integrin links laminin in the basal lamina to the cytoskeleton in order for Schwann cells to ensheath axons, and alteration of this linkage contributes to the peripheral neuropathy of congenital muscular dystrophy.