Neurofibromas, schwannomas and malignant peripheral nerve sheath tumors (MPNSTs) all arise from the Schwann cell lineage. Despite their common origin, these tumor types have distinct pathologies and clinical behaviors; a growing body of evidence indicates that they also arise via distinct pathogenic mechanisms. Identification of the genes that are mutated in genetic diseases characterized by the development of either neurofibromas and MPNSTs [neurofibromatosis type 1 (NF1)] or schwannomas [neurofibromatosis type 2 (NF2), schwannomatosis and Carney complex type 1] has greatly advanced our understanding of these mechanisms. The development of genetically engineered mice with ablation of NF1, NF2, SMARCB1/INI1 or PRKAR1A has confirmed the key role these genes play in peripheral nerve sheath tumorigenesis. Establishing the functions of the NF1, NF2, SMARCB1/INI1 and PRKAR1A gene products has led to the identification of key cytoplasmic signaling pathways promoting Schwann cell neoplasia and identified new therapeutic targets. Analyses of human neoplasms and genetically engineered mouse models have established that interactions with other tumor suppressors such as TP53 and CDKN2A promote neurofibroma-MPNST progression and indicate that intratumoral interactions between neoplastic and non-neoplastic cell types play an essential role in peripheral nerve sheath tumorigenesis. Recent advances have also provided new insights into the identity of the neural crest-derived populations that give rise to different types of peripheral nerve sheath tumors. Based on these findings, we now have an initial outline of the molecular mechanisms driving the pathogenesis of neurofibromas, MPNSTs and schwannomas. However, this improved understanding in turn raises a host of intriguing new questions.