O ligodendrocyte precursor cells (OPCs) persist near the demyelinated axons arising in MS but inefficiently differentiate into oligodendrocytes and remyelinate these axons. The pathogenesis of differentiation failure remains elusive. We initially hypothesized that injured axons fail to present Contactin, a positive ligand for the oligodendroglial Notch1 receptor to induce myelination, and thus tracked axoglial Contactin/Notch1 signaling in situ, using immunohistochemistry in brain tissue from MS patients containing chronic demyelinated lesions. Instead, we found that Contactin was saturated on demyelinated axons, Notch1-positive OPCs accumulated in Contactin-positive lesions, and the receptor was engaged, as demonstrated by cleavage to Notch1-intracellular domain (NICD). However, nuclear translocalization of NICD, required for myelinogenesis, was virtually absent in these cells. NICD and related proteins carrying nuclear localization signals were associated with the nuclear transporter Importin but were trapped in the cytoplasm. Abnormal expression of TIP30, a direct inhibitor of Importin, was observed in these OPCs. Overexpression of TIP30 in a rat OPC cell line resulted in cytoplasmic entrapment of NICD and arrest of differentiation upon stimulation with Contactin-Fc. Our results suggest that extracellular inhibitory factors as well as an intrinsic nucleocytoplasmic transport blockade within OPCs may be involved in the pathogenesis of remyelination failure in MS.