Protein zero (P0) is the major structural protein in peripheral myelin, and mutations in the Myelin Protein Zero (Mpz) gene produce wide-ranging hereditary neuropathy phenotypes. To gain insight in the mechanisms underlying a particularly severe form, congenital hypomyelination (CH), we targeted mouse Mpz to encode P0Q215X, a nonsense mutation associated with the disease, that we show escapes nonsense mediated decay and is expressed in CH patient nerves. The knock-in mice express low levels of the resulting truncated protein, producing a milder phenotype when compared to patients, allowing to dissect the subtle pathogenic mechanisms occurring in otherwise very compromised peripheral myelin. We find that P0Q215X does not elicit an unfolded protein response, which is a key mechanism for other pathogenic MPZ mutations, but is instead in part aberrantly trafficked to non-myelin plasma membranes and induces defects in radial sorting of axons by Schwann cells. We show that the loss of the C-terminal Tyr-Ala-Met-Leu motif is responsible for P0 mislocalization, as its addition is able to restore correct P0Q215X trafficking in vitro. Lastly, we show that P0Q215X acts through dose-dependent gain of abnormal function, as wild-type P0 is unable to rescue the hypomyelination phenotype. Collectively, these data indicate that alterations at the premyelinating stage, linked to altered targeting of P0, may be responsible for CH, and that different types of gain of abnormal function produce the diverse neuropathy phenotypes associated with MPZ, supporting future allele-specific therapeutic silencing strategies.