Carney complex (CNC) is an autosomal dominant neoplasia syndrome caused by inactivating mutations in PRKAR1A, the gene encoding the type 1A regulatory subunit of protein kinase A (PKA). This genetic defect induces skin pigmentation, endocrine tumors, myxomas, and schwannomas. Some patients with the complex also develop myxoid bone tumors termed osteochondromyxomas. To study the link between the PRKAR1A mutations and tumor formation, we generated a mouse model of this condition. Prkar1a^+/− mice develop bone tumors with high frequency, although these lesions have not yet been characterized, either from human patients or from mice. Bone tumors from Prkar1a^+/− mice were heterogeneous, including elements of myxomatous, cartilaginous, and bony differentiation that effaced the normal bone architecture. Immunohistochemical analysis identified an osteoblastic origin for the abnormal cells associated with islands of bone. To better understand these cells at the biochemical level, we isolated primary cultures of tumoral bone and compared them with cultures of bone from wild-type animals. The tumor cells exhibited the expected decrease in Prkar1a protein and exhibited increased PKA activity. At the phenotypic level, we observed that tumor cells behaved as incompletely differentiated osteoblasts and were able to form tumors in immunocompromised mice. Examination of gene expression revealed down-regulation of markers of bone differentiation and increased expression of locally acting growth factors, including members of the Wnt signaling pathway. Tumor cells exhibited enhanced growth in response to PKA-stimulating agents, suggesting that tumorigenesis in osteoblast precursor cells is driven by effects directly mediated by the dysregulation of PKA.