The radical response of peripheral nerves to injury (Wallerian degeneration) is the cornerstone of nerve repair. We show that activation of the transcription factor c-Jun in Schwann cells is a global regulator of Wallerian degeneration. c-Jun governs major aspects of the injury response, determines the expression of trophic factors, adhesion molecules, the formation of regeneration tracks and myelin clearance and controls the distinctive regenerative potential of peripheral nerves. A key function of c-Jun is the activation of a repair program in Schwann cells and the creation of a cell specialized to support regeneration. We show that absence of c-Jun results in the formation of a dysfunctional repair cell, striking failure of functional recovery, and neuronal death. We conclude that a single glial transcription factor is essential for restoration of damaged nerves, acting to control the transdifferentiation of myelin and Remak Schwann cells to dedicated repair cells in damaged tissue.