Electrical excitability-the ability to fire and propagate action potentials-is a signature feature of neurons. How neurons become excitable during development and whether excitability is an intrinsic property of neurons remain unclear. Here, we demonstrate that Schwann cells, the most abundant glia in the peripheral nervous system, promote somatosensory neuron excitability during development. We find that Schwann cells secrete prostaglandin E(2), which is necessary and sufficient to induce developing somatosensory neurons to express normal levels of genes required for neuronal function, including voltage-gated sodium channels, and to fire action potential trains. Inactivating this signaling pathway in Schwann cells impairs somatosensory neuron maturation, causing multimodal sensory defects that persist into adulthood. Collectively, our studies uncover a neurodevelopmental role for prostaglandin E(2) distinct from its established role in inflammation, revealing a cell non-autonomous mechanism by which glia regulate neuronal excitability to enable the development of normal sensory functions.