The use of LINGO-1 antagonists to promote repair of damaged myelin is an emerging therapeutic opportunity for treatment of CNS diseases caused by demyelination such as multiple sclerosis. The Li33 anti-LINGO-1 antibody is a potent inducer of myelination in vitro and in vivo, but aggregation issues prevented the engineering of an optimal development candidate. PEGylated Li33 Fab' is one of several versions of the Li33 antibody that is being investigated in an attempt to identify the most favorable anti-LINGO-1 antibody design. For targeted PEGylation, a Li33 Fab' construct was engineered with a single unpaired cysteine in the heavy-chain hinge sequence. The Fab' was expressed in CHO cells, purified, and PEGylated with 20 kDa methoxy-poly(ethylene glycol) maleimide using a reaction strategy optimized to improve the yield of the PEG-Fab'. Biochemical analysis of the Li33 PEG-Fab' verified the selectivity of the PEGylation reaction. The in vitro and in vivo attributes of the PEG-Fab' were benchmarked against a Li33 full antibody. Both the Li33 PEG-Fab' and intact antibody bound LINGO-1 with nanomolar affinity, promoted myelination in an in vitro signaling assay, and promoted the repair of damaged myelin in the rat lysolecithin model. These studies extend our understanding of the biological activity of the Li33 mAb and validate the use of an anti-LINGO-1 PEG-Fab' for treatment of CNS diseases caused by demyelination.