Drosophila peripheral nerves, similar structurally to the peripheral nerves of mammals, comprise a layer of axons and inner glia, surrounded by an outer perineurial glial layer. Although it is well established that intercellular communication occurs among cells within peripheral nerves, the signaling pathways used and the effects of this signaling on nerve structure and function remain incompletely understood. Here we demonstrate with genetic methods that the Drosophila peripheral nerve is a favorable system for the study of intercellular signaling. We show that growth of the perineurial glia is controlled by interactions among five genes: ine, which encodes a putative neurotransmitter transporter; eag, which encodes a potassium channel; push, which encodes a large, Zn(2+)-finger-containing protein; amn, which encodes a putative neuropeptide related to the pituitary adenylate cyclase activator peptide; and NF1, the Drosophila ortholog of the human gene responsible for type 1 neurofibromatosis. In other Drosophila systems, push and NF1 are required for signaling pathways mediated by Amn or the pituitary adenylate cyclase activator peptide. Our results support a model in which the Amn neuropeptide, acting through Push and NF1, inhibits perineurial glial growth, whereas the substrate neurotransmitter of Ine promotes perineurial glial growth. Defective intercellular signaling within peripheral nerves might underlie the formation of neurofibromas, the hallmark of neurofibromatosis.