Myelination of axons provides the structural basis for rapid saltatory impulse propagation along vertebrate fiber tracts, a well-established neurophysiological concept. However, myelinating oligodendrocytes and Schwann cells serve additional functions in neuronal energy metabolism that are remarkably similar to those of axon-ensheathing glial cells in unmyelinated invertebrates. Here we discuss myelin evolution and physiological glial functions, beginning with the role of ensheathing glia in preventing ephaptic coupling, axoglial metabolic support, and eliminating oxidative radicals. In both vertebrates and invertebrates, axoglial interactions are bidirectional, serving to regulate cell fate, nerve conduction, and behavioral performance. One key step in the evolution of compact myelin in the vertebrate lineage was the emergence of the open reading frame for myelin basic protein within another gene. Several other proteins were neofunctionalized as myelin constituents and help maintain a healthy nervous system. Myelination in vertebrates became a major prerequisite of inhabiting new ecological niches.