Neurofibromatosis 1 (NF1) is a common inherited disease in which affected children exhibit abnormalities in astrocyte growth regulation and are prone to the development of brain tumors (astrocytoma). Previous studies from our laboratory demonstrated that Nf1 mutant mouse astrocytomas contains populations of proliferating nestin+ progenitor cells, suggesting that immature astroglial progenitors may serve as a reservoir of proliferating tumor cells. Here, we directly examined the consequences of Nf1 inactivation on neural stem cell (NSC) proliferation in vitro and in vivo. We found dose-dependent effects of neurofibromin expression on NSC proliferation and survival in vitro, which reflected increased RAS pathway activation and increased bcl2 expression. In addition, unlike wild-type NSCs, Nf1-/- NSCs and, to a lesser extent, Nf1+/- NSCs survive as xenografts in naive recipient brains in vivo. Although Nf1-/- NSCs are multipotent, Nf1-/- and Nf1+/-, but not wild-type, NSCs generated increased numbers of morphologically abnormal, immature astroglial cells in vitro. Moreover, the Nf1-/- NSC growth and survival advantage as well as the astroglial cell differentiation defect were completely rescued by expression of the GAP (RAS-GTPase activating protein) domain of neurofibromin. Finally, the increase in astroglial progenitors and proliferating cells seen in vitro was also observed in Nf1-/- and Nf1+/- embryonic as well as Nf1+/- adult brains in vivo. Collectively, these findings support the hypothesis that alterations in neurofibromin expression in the developing brain have significant consequences for astrocyte growth and differentiation relevant to normal brain development and astrocytoma formation in children.