The mechanisms underlying developmental myelination have therapeutic potential following CNS injury and degeneration. We report that transplanted central glial (CG)-4 cells had a diminished myelinating capacity in myelin-deficient (md) rats when cells express a mutated form of Tau (Tau [688]), which binds Fyn but not the microtubules. In the brain of the md rats, Tau [688]-transfected CG-4 cells displayed a decrease in cellular process outgrowth and myelination; in the spinal cord the extent of myelination rostral and caudal to the injection site was decreased. In contrast, control Tau [605]-transfected CG-4 cells formed long cellular processes and substantial areas of myelin both in the brain and spinal cord. In culture, Tau [688]-transfected CG-4 cells displayed a decrease in cellular process outgrowth, and Fyn localized largely in the cell body, not the processes. Thus, Tau in oligodendrocytes plays a key role in myelination, and a functional Tau-Fyn interaction might have therapeutic potential during demyelination and myelin repair following CNS injury and degeneration.