Distal axonopathy is a recognized pathological feature of amyotrophic lateral sclerosis (ALS). In the peripheral nerves of ALS patients, motor axon loss elicits a Wallerian‐like degeneration characterized by denervated Schwann cells (SCs) together with immune cell infiltration. However, the pathogenic significance of denervated SCs accumulating following impaired axonal growth in ALS remains unclear. Here, we analyze SC phenotypes in sciatic nerves of ALS patients and paralytic SOD1G93A rats, and identify remarkably similar and specific reactive SC phenotypes based on the pattern of S100β, GFAP, isolectin and/or p75NTR immunoreactivity. Different subsets of reactive SCs expressed colony‐stimulating factor‐1 (CSF1) and Interleukin‐34 (IL‐34) and closely interacted with numerous endoneurial CSF‐1R‐expressing monocyte/macrophages, suggesting a paracrine mechanism of myeloid cell expansion and activation. SCs bearing phagocytic phenotypes as well as endoneurial macrophages expressed stem cell factor (SCF), a trophic factor that attracts and activates mast cells through the c‐Kit receptor. Notably, a subpopulation of Ki67+ SCs expressed c‐Kit in the sciatic nerves of SOD1G93A rats, suggesting a signaling pathway that fuels SC proliferation in ALS. c‐Kit+ mast cells were also abundant in the sciatic nerve from ALS donors but not in controls. Pharmacological inhibition of CSF‐1R and c‐Kit with masitinib in SOD1G93A rats potently reduced SC reactivity and immune cell infiltration in the sciatic nerve and ventral roots, suggesting a mechanism by which the drug ameliorates peripheral nerve pathology. These findings provide strong evidence for a previously unknown inflammatory mechanism triggered by SCs in ALS peripheral nerves that has broad application in developing novel therapies. Schwann cells expressing CSF1, IL‐34, and SCF accumulate in the sciatic nerves from ALS subjects. Schwann cells interact with myeloid and mast cells expressing CSF‐1R and c‐Kit receptors, respectively. Pharmacological inhibition of CSF‐1R and c‐Kit ameliorates sciatic nerve pathology.