Schwann cells (SCs) transition into a repair phenotype after peripheral nerve injury, which is crucial for supporting axon regeneration. However, the early SC injury response preceding the repair state remains poorly understood. Here, we demonstrate that Sarm1, a key regulator of axon degeneration, is expressed in SCs and has a critical role in the early SC injury response. Leveraging the fact that Sarm1 deletion impairs the SC transition to the repair state, we used single-nucleus RNA sequencing to compare the transcriptional responses of wild-type and Sarm1 knockout SCs 24 hours after nerve injury. Remarkably, Sarm1-deficient SCs, unlike wild-type SCs, showed increased expression of genes involved in oxidative phosphorylation and the TCA cycle. These findings were functionally validated, revealing that Sarm1 knockout SCs displayed increased mitochondrial respiration in response to injury. Intriguingly, Sarm1 knockout SCs also exhibited enhanced axon protection compared to wild-type SCs in an in vitro model of axon degeneration. We propose that Sarm1 gates the transition of SCs from a protective, oxidative phosphorylation-dependent state (which we term Protection Associated Schwann Cells or PASCs) to a glycolytic, pro-regenerative repair phenotype after injury. Our findings challenge the prevailing view of Sarm1 as an exclusively axon-autonomous regulator of degeneration and reveal a paradigm shift in understanding the role of Sarm1 in the SC injury response, with broad implications for the treatment of peripheral neuropathies and neurodegenerative diseases.