Glioblastoma remains one of the most deadly cancers due to their rapid onset and the limited effectiveness of therapies. Here we use a mouse genetic system termed Mosaic Analysis with Double Markers (MADM) to study progression towards malignancy in oligodendrocyte progenitor cells (OPC), the cell of origin of glioma. We use gene deletions to uncover individual roles of two commonly mutated tumor suppressor genes, p53 and NF1. NF1 acts as a negative regulator of OPC self-renewal and promoter of OPC differentiation, and p53 increases the permanent arrest of OPC proliferation during times of stress. Subsequent analysis revealed that the downstream NF1 effector, mTOR, is critical for OPC transformation. Furthermore, mutant OPCs expand at the expense of surrounding non-mutant OPCs through a mechanism termed cell competition, to maintain proper density in the brain. This cell competition phenomenon is critical for OPC transformation as the complete inhibition of this property leads to inhibition of gliomagenesis irrespective of p53 and NF1 mutations. In summary, our findings reveal distinct roles for p53 and NF1 during gliomagenesis and a unique cell-cell interaction during the progression that is critical for malignancy.