Abstract INTRODUCTION Neurofibromatosis Type 1 is hereditary tumor predisposition syndrome that results in the development of innumerable nerve sheath tumors that fall within the spectrum of benign, premalignant and malignant lesions. Our previous work has demonstrated that SHH pathway activation drives malignant transformation in a subset of malignant peripheral nerve sheath tumors (MPNSTs). Here, we demonstrate that SHH pathway activation induces a neural crest cell-like state in a subset of MPNSTs. METHODS We performed single nuclear RNA sequencing on 6 tumors (5 MPNSTS and 1 atypical neurofibroma). We performed in vitro experiments to assess the correlation between SHH pathway activation and neural crest signatures. We inhibited SHH pathway with sonidegib, a SMO inhibitor, in MPNST cell lines and performed RT-PCR to assess markers of neural crest cell signatures. In addition, we assessed cellular viability with treatment. RESULTS We observed that cells that express SMO at high levels, with SHH pathway activation, express neural crest cell makers. Single cell trajectory analysis further demonstrates a pseudotemporal continuum from atypical neurofibromas (Schwann cells), MPNSTs (Schwann cell precursor cells) and other MPNSTs (neural crest cells), which supports that these tumors fall along the developmental trajectory of neural crest cell lineage. SHH pathway activity was high in S462TY MPNST cell line and low in STS-26T MPNST cell line. S462TY also demonstrated prominent elevation in expression of neural crest cell markers TWIST1, SOX9, SNAI2, OTX2, PAX4 and PAX6 . We found that treatment with sonidegib treatment attenuates the expression of neural crest cell signatures. Finally, inhibiting SHH pathway activation reduced cellular viability in MPNST cell lines. CONCLUSION SHH pathway activation drives dedifferentiation into a neural crest cell-like state in a subset of MPNSTs. We confirm that inhibiting SHH pathway activity in a subset of MPNSTS prevent growth and malignant progression, providing a rational for future clinical trials.