Rapid saltatory nerve conduction is facilitated by myelin structure, which is composed of Schwann cells in the peripheral nervous system. Schwann cells drastically change their phenotype following peripheral nerve injury. These phenotypic changes are required for efficient degeneration/regeneration. We previously identified ZNRF1 as an E3 ubiquitin ligase containing a RING finger motif, whose expression is upregulated in the Schwann cells following nerve injury. This suggested that posttranscriptional regulation of protein expression in Schwann cells may be involved in their phenotypic changes during nerve degeneration/regeneration. Here we report the identification of glutamine synthetase (GS), an enzyme that synthesizes glutamine using glutamate and ammonia, as a substrate for E3 activity of ZNRF1 in Schwann cells. GS is known to be highly expressed in differentiated Schwann cells, but its functional significance has remained unclear. We found that during nerve degeneration/regeneration, GS expression is controlled mostly by ZNRF1-dependent proteasomal degradation. We also found that Schwann cells increase oxidative stress upon initiation of nerve degeneration, which promotes carbonylation and subsequent degradation of GS. Surprisingly, we discovered that GS expression regulates Schwann cell differentiation; i.e., increased GS expression promotes myelination via its enzymatic activity. Among the substrates and products of GS, increased glutamate concentration inhibited myelination and yet promoted Schwann cell proliferation by activating metabotropic glutamate receptor signaling. This would suggest that GS may exert its effect on Schwann cell differentiation by regulating glutamate concentration. These results indicate that the ZNRF1-GS system may play an important role in correlating Schwann cell metabolism with its differentiation.