Our intracranial implantation mouse model of ependymoma clearly demonstrates overexpression of the ephrin receptor EphB2 in Ink4a/Arf((-/-)) supratentorial embryonic neural stem cells (STeNSCs) to be essential for transformation and disease development; however the requirement for and consequence of receptor activation on transformation and neural stem cell function were not examined. We definitively illustrate the necessity for receptor activation in cellular transformation and the importance of implantation site and microenvironment in directing ependymoma development. In vitro assays of EphB2 overexpressing Ink4a/Arf((-/-)) STeNSCs showed no changes in their neural stem cell characteristics (stem cell marker expression and self-renewal) upon receptor activation, but EphB2 driven tumor cells were inhibited significantly in differentiation and exhibited increased tumorsphere formation and cellular proliferation in response to ephrin-B ligand mediated receptor activation. Additionally, we observed substantial differences in the phosphorylation state of several key proteins involved in Ras and p38 MAPK signaling when comparing EphB2 overexpressing Ink4a/Arf((-/-)) STeNSCs and tumor cells with relatively little change in total protein levels. We propose that EphB2 mediated ependymoma development is a multifactorial process requiring microenvironment directed receptor activation, resulting in changes in the phosphorylation status of key regulatory proteins, maintenance of a stem-like state and cellular proliferation.