Significance Here we describe and utilize a model of medulloblastoma, a malignancy accounting for 20% of all childhood brain cancers. We used iPS-derived neural stem cells with a familial mutation causing aberrant SHH signaling. We show that these cells, when transplanted into mouse cerebellum, form tumors that mimics SHH-driven medulloblastoma, demonstrating the development of cancer from healthy neural stem cells in vivo. Our results show that reprogramming of somatic cells carrying familial cancer mutations can be used to model the initiation and progression of childhood cancer.