Glioblastomas often show activation of epidermal growth factor receptor (EGFR) and loss of PTEN (phosphatase and tensin homolog deleted on chromosome 10) tumor suppressor, but it is not known if these two genetic lesions act together to transform cells. To answer this question, we infected PTEN-/- neural precursor cells with a retrovirus encoding EGFRvIII, which is a constitutively activated receptor. EGFRvIII PTEN-/- cells formed highly mitotic tumors with nuclear pleomorphism, necrotic areas, and glioblastoma markers. The transformed cells showed increased cell proliferation, centrosome amplification, colony formation in soft agar, self-renewal, expression of the stem cell marker CD133, and resistance to oxidative stress and ionizing radiation. The RAS/mitogen-activated protein kinase (ERK) and phosphoinositide 3-kinase/protein kinase B (PI3K/Akt) pathways were activated, and checkpoint kinase 1 (Chk1), the DNA damage regulator, was phosphorylated at S280 by Akt, suppressing Chk1 phosphorylation at S345 in response to ionizing irradiation. The PTEN-/- cells showed low levels of DNA damage in the absence of irradiation, which was increased by EGFRvIII expression. Finally, secondary changes occurred during tumor growth in mice. Cells from these tumors showed decreased tumor latencies and additional chromosomal aberrations. Most of these tumor lines showed translocations of mouse chromosome 15. Intracranial injections of one of these lines led to invasive, glial fibrillary acidic protein-positive, nestin-positive tumors. These results provide a molecular basis for the occurrence of these two genetic lesions in brain tumors and point to a role in induction of genomic instability.