To identify genes and signaling pathways that initiate Neurofibromatosis type 1 (NF1) neurofibromas, we used unbiased insertional mutagenesis screening, mouse models, and molecular analyses. We mapped an Nf1-Stat3-Arid1b/β-catenin pathway that becomes active in the context of Nf1 loss. Genetic deletion of Stat3 in Schwann cell progenitors (SCPs) and Schwann cells (SCs) prevents neurofibroma formation, decreasing SCP self-renewal and β-catenin activity. β-catenin expression rescues effects of Stat3 loss in SCPs. Importantly, P-STAT3 and β-catenin expression correlate in human neurofibromas. Mechanistically, P-Stat3 represses Gsk3β and the SWI/SNF gene Arid1b to increase β-catenin. Knockdown of Arid1b or Gsk3β in Stat3(fl/fl);Nf1(fl/fl);DhhCre SCPs rescues neurofibroma formation after in vivo transplantation. Stat3 represses Arid1b through histone modification in a Brg1-dependent manner, indicating that epigenetic modification plays a role in early tumorigenesis. Our data map a neural tumorigenesis pathway and support testing JAK/STAT and Wnt/β-catenin pathway inhibitors in neurofibroma therapeutic trials.