The mechanisms causing persistence of embryonal cells that later give rise to tumors is unknown. One tumorigenic factor in the embryonal childhood tumor neuroblastoma is the MYCN protooncogene. Here we show that normal mice developed neuroblast hyperplasia in paravertebral ganglia at birth that completely regressed by 2 weeks of age. In contrast, ganglia from MYCN transgenic (TH-MYCN) mice demonstrated a marked increase in neuroblast hyperplasia and MycN expression during week 1. Regression of neuroblast hyperplasia was then delayed and incomplete before neuroblastoma tumor formation at 6 and 13 weeks in homo- and hemizygote mice, respectively. Paravertebral neuronal cells cultured from perinatal TH-MYCN mice exhibited 3- to 10-fold resistance to nerve growth factor (NGF) withdrawal, compared with normal mice. Both low- and high-affinity NGF receptors were expressed in perinatal neuroblast hyperplasia but not in neuroblastoma tumor tissue. MYCN transgene amplification was present at low levels in perinatal neuroblast hyperplasia from both homo- and hemizygote TH-MYCN mice. However, only in hemizygous mice did tumor formation correlate with a stepwise increase in the frequency of MYCN amplification. These data suggest that inappropriate perinatal MycN expression in paravertebral ganglia cells from TH-MYCN mice initiated tumorigenesis by altering the physiologic process of neural crest cell deletion. Persisting embryonal neural crest cells underwent further changes, such as MYCN amplification and repression of NGF receptor expression, during tumor progression. Our studies provide a model for studying perinatal factors influencing embryonal tumor initiation.