Neural stem cells (NSCs) are considered to be the cell of origin of glioblastoma multiforme (GBM). However, the genetic alterations that transform NSCs into glioma-initiating cells remain elusive. Using a unique transposon mutagenesis strategy that mutagenizes NSCs in culture, followed by additional rounds of mutagenesis to generate tumors in vivo, we have identified genes and signaling pathways that can transform NSCs into glioma-initiating cells. Mobilization of Sleeping Beauty transposons in NSCs induced the immortalization of astroglial-like cells, which were then able to generate tumors with characteristics of the mesenchymal subtype of GBM on transplantation, consistent with a potential astroglial origin for mesenchymal GBM. Sequence analysis of transposon insertion sites from tumors and immortalized cells identified more than 200 frequently mutated genes, including human GBM-associated genes, such as Met and Nf1, and made it possible to discriminate between genes that function during astroglial immortalization vs. later stages of tumor development. We also functionally validated five GBM candidate genes using a previously undescribed high-throughput method. Finally, we show that even clonally related tumors derived from the same immortalized line have acquired distinct combinations of genetic alterations during tumor development, suggesting that tumor formation in this model system involves competition among genetically variant cells, which is similar to the Darwinian evolutionary processes now thought to generate many human cancers. This mutagenesis strategy is faster and simpler than conventional transposon screens and can potentially be applied to any tissue stem/progenitor cells that can be grown and differentiated in vitro.