Objective: To evaluate the longitudinal correlations between sulfatide/lysosulfatide levels and central and peripheral nervous system function in children with metachromatic leukodystrophy (MLD) and to explore the impact of intravenous recombinant human arylsulfatase A (rhASA) treatment on myelin turnover. Methods: A Phase 1/2 study of intravenous rhASA investigated cerebrospinal fluid (CSF) and sural nerve sulfatide levels, 88-item Gross Motor Function Measure (GMFM-88) total score, sensory and motor nerve conduction, brain N-acetylaspartate (NAA) levels, and sural nerve histology in 13 children with MLD. Myelinated and unmyelinated nerves from an untreated MLD mouse model were also analyzed. Results: CSF sulfatide levels correlated with neither Z-scores for GMFM-88 nor brain NAA levels; however, CSF sulfatide levels correlated negatively with Z-scores of nerve conduction parameters, number of large (≥7 μm) myelinated fibers, and myelin/fiber diameter slope, and positively with nerve g-ratios and cortical latencies of somatosensory-evoked potentials. Quantity of endoneural litter positively correlated with sural nerve sulfatide/lysosulfatide levels. CSF sulfatide levels decreased with continuous high-dose treatment; this change correlated with improved nerve conduction. At 26 weeks after treatment, nerve g-ratio decreased by 2%, and inclusion bodies per Schwann cell unit increased by 55%. In mice, abnormal sulfatide storage was observed in non-myelinating Schwann cells in Remak bundles of sciatic nerves but not in unmyelinated urethral nerves. Interpretation: Lower sulfatide levels in the CSF and peripheral nerves correlate with better peripheral nerve function in children with MLD; intravenous rhASA treatment may reduce CSF sulfatide levels and enhance sulfatide/lysosulfatide processing and remyelination in peripheral nerves.