Oligodendrocyte precursor cells differentiate to produce myelin sheaths that insulate axons to ensure fast propagation of action potentials. Many aspects of differentiation are regulated by multiple extracellular signals. However, their intracellular signalings remain elusive. We show that Rab35 and its effector, ACAP2, a GTPase-activating protein that switches off Arf6 activity, negatively regulate oligodendrocyte morphological differentiation. Knockdown of Rab35 or ACAP2 with their respective small interfering RNAs promotes differentiation. As differentiation initiates, the activities of Rab35 and ACAP2 are down-regulated. The activity of Arf6, in contrast, is up-regulated. Arf6 knockdown inhibits differentiation, indicating that Rab35 and ACAP2 negatively regulate differentiation by down-regulating Arf6. Importantly, as differentiation proceeds, the activity of cytohesin-2, a guanine nucleotide exchange factor that switches on Arf6 activity, is up-regulated. Pharmacological inhibition of cytohesin-2 inhibits differentiation, suggesting that cytohesin-2 promotes differentiation by activating Arf6. Furthermore, using oligodendrocyte-neuronal cocultures, we find that knockdown of Rab35 or ACAP2 promotes myelination, whereas inhibition of cytohesin-2 or knockdown of Arf6 inhibits myelination. Thus Rab35/ACAP2 and cytohesin-2 antagonistically control oligodendrocyte differentiation and myelination through Arf6 regulation, presenting a unique small GTPase on/off switching mechanism.