Hidden hearing loss (HHL) is a recently described auditory neuropathy believed to contribute to speech discrimination and intelligibility deficits in people with normal audiological tests. Animals and humans with HHL have normal auditory thresholds but defective cochlear neurotransmission, that is, reduced suprathreshold amplitude of the sound-evoked auditory nerve compound action potential. Currently, the only cellular mechanism known for HHL is loss of inner hair cell synapses (synaptopathy). Here we report that transient loss of cochlear Schwann cells results in permanent auditory deficits characteristic of HHL. This auditory neuropathy is not associated with synaptic loss, but rather with disruption of the first heminodes at the auditory nerve peripheral terminal. Thus, this study identifies a new mechanism for HHL, highlights the long-term consequences of transient Schwann cell loss on hearing and might provide insights into the causes of the auditory deficits reported in patients that recover from acute demyelinating diseases such as Guillain-Barré syndrome.