Cell proliferation and cell death play critical roles in embryonic development, postnatal tissue maintenance, and tumor formation. To understand the interplay between cell proliferation and death in tumor formation, we studied these two processes in nascent primitive neuroectodermal tumors that arose postnatally from neuroepithelial cells ventral to the median eminence of transgenic mice (designated rTH-Tag mice) carrying a Simian virus 40 large T antigen transgene driven by a rat tyrosine hydroxylase promoter. Cell proliferation continued in the neuroepithelium of the ventral median eminence in wild-type and transgenic animals for the first 2 weeks of postnatal life but subsided completely in the wild-type mice after 2 weeks of age. In contrast, mitotic activity persisted in these progenitor cells of the rTH-Tag mice, and there was a dramatic increase in mitotic activity after 10 weeks leading to the formation of primitive neuroectodermal tumors despite sustained cell death activity. We conclude that primitive neuroectodermal tumors originate from progenitor cells in the ventral median eminence of rTH-Tag mice in early postnatal life when progenitors fail to respond to signals to exit the cell cycle. Thus, the disruption of mechanisms that regulate cell proliferation and cell death in the developing brain may underlie the emergence of primitive neuroectodermal tumors in the rTH-Tag mice.