Neurofibromatosis 1 (NF1) is a common autosomal dominant disease characterized by complex and multicellular neurofibroma tumors. Significant advances have been made in the research of the cellular, genetic, and molecular biology of NF1. The NF1 gene was identified by positional cloning. The functions of its protein product, neurofibromin, in RAS signaling and in other signal transduction pathways are being elucidated, and the important roles of loss of heterozygosity and haploinsufficiency in tumorigenesis are better understood. The Schwann cell was discovered to be the cell of origin for neurofibromas, but understanding of a more complicated interplay of multiple cell types in tumorigenesis, specifically recruited heterogeneous cell types such as mast cells and fibroblasts, has important implications for surgical therapy of these tumors. This review summarizes the most recent NF1 and neurofibroma literature describing the pathogenesis and treatment of nerve sheath tumors. Understanding the biological underpinnings of tumorigenesis in NF1 has implications for future surgical and medical management of neurofibromas.