Recovery from injury to the central nervous system (CNS) is limited in the mammalian adult. Nonetheless, some degree of spontaneous recovery occurs after partial CNS injury. Compensatory axonal growth from uninjured neurons, termed sprouting, contributes to this naturally occurring recovery process and can be modulated by molecular intervention. Extensive studies have depicted a long-held hypothesis that oligodendrocyte-derived Nogo restricts axonal sprouting and functional recovery after CNS injury. However, cell type-specific function of Nogo in compensatory sprouting, spinal axon repair or functional recovery after CNS injury has not been reported. Here we present data showing that inducible, cell type-specific deletion of Nogo from oligodendrocytes led to a ~50% increase in the compensatory sprouting of corticospinal tract (CST) axons in the cervical spinal cord after unilateral pyramidotomy in mice. In contrast to a previously proposed growth-promoting role of neuronal Nogo in the optic nerve, deleting neuronal Nogo did not significantly affect CST axon sprouting in the spinal cord. Sprouting axons were associated with the expression of synaptic marker VGLUT1 in both the oligodendrocytic Nogo deletion and control mice. However, we did not detect any functional improvement in fine motor control associated with the increased sprouting in oligodendrocytic Nogo deletion mice. These data show for the first time with genetic evidence that Nogo specifically expressed by oligodendrocytes restricts compensatory sprouting after CNS injury, supporting a longstanding but heretofore untested hypothesis. While implicating a focus on sprouting as a repair mechanism in the translational potential of targeting the myelin inhibitory pathway, our study illustrates the challenge to harness enhanced structural plasticity for functional improvement.