ErbB2 receptor tyrosine kinase plays a role in neuregulin signaling and is expressed in the developing nervous system. We genetically rescued the cardiac defect of erbB2 null mutant embryos, which otherwise died at E11. These rescued erbB2 mutant mice die at birth and display a severe loss of both motor and sensory neurons. Motor and sensory axons are severely defasciculated and aberrantly projected within their final target tissues. Schwann cells are completely absent in the peripheral nerves. Schwann cell precursors are present within the DRG and proliferate normally, but their ability to migrate is decreased. Acetylcholine receptors cluster within the central band of the mutant diaphragm muscle. However, these clusters are dispersed and morphologically different from those in control muscle. Our results reveal an important role for erbB2 during normal peripheral nervous system development.