Schwann cells are highly plastic cells that dedifferentiate to a progenitor-like state following injury. However, deregulation of this plasticity, may be involved in the formation of neurofibromas, mixed-cell tumors of Schwann cell (SC) origin that arise upon loss of NF1. Here, we show that adult myelinating SCs (mSCs) are refractory to Nf1 loss. However, in the context of injury, Nf1-deficient cells display opposing behaviors along the wounded nerve; distal to the injury, Nf1^−/− mSCs redifferentiate normally, whereas at the wound site Nf1^−/− mSCs give rise to neurofibromas in both Nf1^+/+ and Nf1^+/− backgrounds. Tracing experiments showed that distinct cell types within the tumor derive from Nf1-deficient SCs. This model of neurofibroma formation demonstrates that neurofibromas can originate from adult SCs and that the nerve environment can switch from tumor suppressive to tumor promoting at a site of injury. These findings have implications for both the characterization and treatment of neurofibromas.