CNS damage often results in demyelination of spared axons due to oligodendroglial cell death and dysfunction near the injury site. Although new oligodendroglia are generated following CNS injury and disease, the process of remyelination is typically incomplete resulting in long-term functional deficits. Chondroitin sulfate proteoglycans (CSPGs) are upregulated in CNS grey and white matter following injury and disease and are a major component of the inhibitory scar that suppresses axon regeneration. CSPG inhibition of axonal regeneration is mediated, at least in part, by the protein tyrosine phosphatase sigma (PTPσ) receptor. Recent evidence demonstrates that CSPGs inhibit OL process outgrowth, however, the means by which their effects are mediated remains unclear. Here we investigate the role of PTPσ in CSPG inhibition of OL function. We found that the CSPGs, aggrecan, neurocan and NG2 all imposed an inhibitory effect on OL process outgrowth and myelination. These inhibitory effects were reversed by degradation of CSPGs with Chondroitinase ABC prior to OL exposure. RNAi-mediated down-regulation of PTPσ reversed the inhibitory effect of CSPGs on OL process outgrowth and myelination. Likewise, CSPG inhibition of process outgrowth and myelination was significantly reduced in cultures containing PTPσ^−/− OLs. Finally, inhibition of Rho-associated kinase (ROCK) increased OL process outgrowth and myelination during exposure to CSPGs. These results suggest that in addition to their inhibitory effects on axon regeneration, CSPGs have multiple inhibitory actions on OLs that result in incomplete remyelination following CNS injury. The identification of PTPσ as a receptor for CSPGs, and the participation of ROCK downstream of CSPG exposure, reveal potential therapeutic targets to enhance white matter repair in the damaged CNS.