Schwann cell myelin contains highly compacted layers of membrane as well as noncompacted regions with a visible cytoplasm. One of these cytoplasmic compartments is the Schmidt-Lanterman incisure, which spirals through the compacted layers and is believed to help sustain the growth and function of compact myelin. Incisures contain adherens junctions (AJs), the key components of which are E-cadherin, its cytoplasmic partners called catenins, and F-actin. To explore in vivo the role of cadherin and catenins in incisures, E-cadherin mutant proteins that completely replace endogenous cadherin have been delivered to the cells using adenovirus. When the introduced cadherin lacked its extracellular domain, association of p120 catenin (p120ctn) with the cadherin did not occur, and incisures disappeared. Remarkably, the additional replacement of two phosphorylatable tyrosines by phenylalanine in the cytoplasmic tail of the mutant cadherin restored both p120ctn binding and incisure architecture, indicating that p120ctn recruitment is critical for incisures maintenance and might be regulated by phosphorylations. In addition, the ability of the p120ctn/cadherin complex to support incisures was blocked by mutation of the Rho GTPase regulatory region of the p120ctn, and downregulation of Rac1 activity at the junction reversed this inhibition. Because Rho GTPases regulate the state of the actin filaments, these findings suggest that one role of p120ctn in incisures is to organize the cytoskeleton at the AJ. Finally, developmental studies of Schwann cells demonstrated that p120ctn recruitment from the cytoplasm to the AJ occurs before the appearance of Rac1 GTPase and F-actin at the junction.