Myelin is required for nervous system function. In the peripheral nervous system, Schwann cells (SCs) form myelin and trophically support the axons they ensheath. We previously showed that the mitochondrial protein prohibitin 2 (PHB2) can localize to the axon-SC interface and is required for developmental myelination. Whether the homologous protein PHB1 has a similar role, and whether prohibitins also play important roles in SC mitochondria is unknown. Here we show that deletion of Phb1 in SCs only minimally perturbs development, but later triggers a severe demyelinating peripheral neuropathy. Moreover, mitochondria are heavily affected by ablation of Phb1 and demyelination occurs preferentially in cells with apparent mitochondrial loss. Furthermore, in response to mitochondrial damage, SCs trigger the integrated stress response (ISR), but, contrary to what was previously suggested, the ISR is not detrimental and may be beneficial in this context. These results identify a new role for PHB1 in myelin integrity and advance our understanding of how SCs respond to mitochondrial damage.