Dissecting the early steps of tumourigenesis is key to our understanding of cancer biology. However, lack of knowledge of initiating mutations and the target ‘cell of origin' has slowed progress towards this goal. Genetically engineered mouse models of the tumour-predisposition syndrome neurofibromatosis type-1 provide a rare opportunity to study tumour initiation resulting from a known genetic change in a known cell type. Recent exciting work using these models now sheds more light onto early tumourigenesis. Here, we discuss the studies that have identified mature differentiated Schwann cells as the cell of origin and revealed the molecular and cellular mechanisms of neurofibroma initiation. A novel dual and opposing role for the microenvironment, from pro-differentiative to pro-carcinogenic, has emerged.