Leprosy is a chronic infectious disease caused by Mycobacterium leprae infection in Schwann cells. Axonopathy is considered a hallmark of leprosy neuropathy and is associated with the irreversible motor and sensory loss seen in infected patients. Although M. leprae is recognized to provoke Schwann cell dedifferentiation, the mechanisms involved in the contribution of this phenomenon to neural damage remain unclear. In the present work, we used live M. leprae to infect the immortalized human Schwann cell line ST8814. The neurotoxicity of infected Schwann cell‐conditioned medium (SCCM) was then evaluated in a human neuroblastoma cell lineage and mouse neurons. ST8814 Schwann cells exposed to M. leprae affected neuronal viability by deviating glial 14C‐labeled lactate, important fuel of neuronal central metabolism, to de novo lipid synthesis. The phenolic glycolipid‐1 (PGL‐1) is a specific M. leprae cell wall antigen proposed to mediate bacterial–Schwann cell interaction. Therefore, we assessed the role of the PGL‐1 on Schwann cell phenotype by using transgenic M. bovis (BCG)‐expressing the M. leprae PGL‐1. We observed that BCG‐PGL‐1 was able to induce a phenotype similar to M. leprae, unlike the wild‐type BCG strain. We next demonstrated that this Schwann cell neurotoxic phenotype, induced by M. leprae PGL‐1, occurs through the protein kinase B (Akt) pathway. Interestingly, the pharmacological inhibition of Akt by triciribine significantly reduced free fatty acid content in the SCCM from M. leprae‐ and BCG‐PGL‐1‐infected Schwann cells and, hence, preventing neuronal death. Overall, these findings provide novel evidence that both M. leprae and PGL‐1, induce a toxic Schwann cell phenotype, by modifying the host lipid metabolism, resulting in profound implications for neuronal loss. We consider this metabolic rewiring a new molecular mechanism to be the basis of leprosy neuropathy. Leprosy is a chronic infectious disease caused by the intracellular pathogen M. leprae, known for its predilection to Schwann cells, the principal glial cells of the peripheral nerve. Here, we observed that M. leprae, via PGL‐1, triggers AKT phosphorylation in Schwann cells and contributes to de novo lipid synthesis and mitochondrial dysfunction. Collectively, our data indicate that the decreased production of lactate and the increased lipid release by M. leprae‐infected Schwann cells are able to promote neuronal death and disturbance of neuronal branching/outgrowth.