Charcot-Marie-Tooth neuropathy (CMT) represents a heterogenous group of inherited disorders of the peripheral nervous system. One form of autosomal recessive demyelinating CMT (CMT4C, 5q32) is caused by mutations in the gene encoding KIAA1985, a protein of so far unknown function. Here we show that KIAA1985 is exclusively expressed in Schwann cells. KIAA1985 is tethered to cellular membranes through an N-terminal myristic acid anchor and localizes to the perinuclear recycling compartment. A search for proteins that interact with KIAA1985 identified the small GTPase Rab11, a key regulator of recycling endosome functions. CMT4C-related missense mutations disrupt the KIAA1985/Rab11 interaction. Protein binding studies indicate that KIAA1985 functions as a Rab11 effector, as it interacts only with active forms of Rab11 (WT and Q70L) and does not interact with the GDP locked mutant (S25N). Consistent with a function of Rab11 in Schwann cell myelination, myelin formation was strongly impaired when dorsal root ganglion neurons were co-cultured with Schwann cells infected with Rab11 S25N. Our data indicate that the KIAA1985/Rab11 interaction is relevant for peripheral nerve pathophysiology and place endosomal recycling on the list of cellular mechanisms involved in Schwann cell myelination.