The genetic evolution from a benign neurofibroma to a malignant sarcoma in patients with neurofibromatosis type 1 (NF1) syndrome remains unclear. Schwann cells and/or their precursor cells are believed to be the primary pathogenic cell in neurofibromas because they harbor biallelic neurofibromin 1 (NF1) gene mutations. However, the phosphatase and tensin homolog (Pten) and neurofibromatosis 1 (Nf1) genes recently were found to be comutated in high-grade peripheral nerve sheath tumors (PNST) in mice. In this study, we created transgenic mice that lack both Pten and Nf1 in Schwann cells and Schwann cell precursor cells to validate the role of these two genes in PNST formation in vivo. Haploinsufficiency or complete loss of Pten dramatically accelerated neurofibroma development and led to the development of higher grade PNSTs in the context of Nf1 loss. Pten dosage, together with Nf1 loss, was sufficient for the progression from low-grade to high-grade PNSTs. Genetic analysis of human malignant PNSTs (MPNST) also revealed downregulation of PTEN expression, suggesting that Pten-regulated pathways are major tumor-suppressive barriers to neurofibroma progression. Together, our findings establish a novel mouse model that can rapidly recapitulate the onset of human neurofibroma tumorigenesis and the progression to MPNSTs. Cancer Res; 72(13); 3405–13. ©2012 AACR.