Clinically relevant peripheral neuropathies (such as diabetic and human immunodeficiency virus sensory neuropathies) are characterized by distal axonal degeneration, rather than neuronal death. Here, we describe a novel, endogenous pathway that prevents axonal degeneration. We show that in response to axonal injury, periaxonal Schwann cells release erythropoietin (EPO), which via EPO receptor binding on neurons, prevents axonal degeneration. We demonstrate that the relevant axonal injury signal that stimulates EPO production from surrounding glial cells is nitric oxide. In addition, we show that this endogenous pathway can be therapeutically exploited by administering exogenous EPO. In an animal model of distal axonopathy, systemic EPO administration prevents axonal degeneration, and this is associated with a reduction in limb weakness and neuropathic pain behavior. Our in vivo and in vitro data suggest that EPO prevents axonal degeneration and therefore may be therapeutically useful in a wide variety of human neurological diseases characterized by axonopathy.