Myelin, the insulating sheath that surrounds neuronal axons, is produced by oligodendrocytes in the central nervous system (CNS). This evolutionary innovation, which first appears in jawed vertebrates, enabled rapid transmission of nerve impulses, more complex brains and greater morphological diversity. Here we report that RNA level expression of RNLTR12-int, a retrotransposon of retroviral origin, is essential for myelination. We show RNLTR12-int-encoded non-coding RNA binds to the transcription factor SOX10 to regulate transcription of myelin basic protein (Mbp, the major constituent of myelin) in rodents. RNLTR12-int like sequences (which we name RetroMyelin ) are found in all jawed-vertebrates and we further demonstrate their function in regulating myelination in two different vertebrate phyla (zebrafish and frogs). Our study therefore suggests that retroviral endogenization was a key step in the emergence of vertebrate myelin.