Abstract Background Malignant peripheral nerve sheath tumors (MPNST) can arise from atypical neurofibromas (ANF). Loss of the polycomb repressor complex 2 (PRC2) is a common event. Previous studies on PRC2-regulated genes in MPNST used genetic addback experiments in highly aneuploid MPNST cell lines which may miss PRC2-regulated genes in NF1-mutant ANF-like precursor cells. A set of PRC2-regulated genes in human Schwann cells has not been defined. We hypothesized PRC2 loss has direct and indirect effects on gene expression resulting in MPNST, so we sought to identify PRC2-regulated genes in immortalized human Schwann cells (iHSCs). Methods We engineered NF1-deficient iHSCs with loss of function SUZ12 or EED mutations. RNA sequencing revealed 1,327 differentially expressed genes to define PRC2-regulated genes. To investigate MPNST pathogenesis we compared genes in iHSCs to consistent gene expression differences between ANF and MPNSTs. Chromatin immunoprecipitation sequencing was used to further define targets. Methylome and proteomic analyses were performed to further identify enriched pathways. Results We identified potential PRC2-regulated drivers of MPNST progression. Pathway analysis indicates many upregulated cancer-related pathways. We found transcriptional evidence for activated Notch and Sonic Hedgehog signaling in PRC2-deficient iHSCs. Functional studies confirm Notch signaling is active in MPNST cell lines, patient-derived xenografts, and transient cell models of PRC2 deficiency. A combination of MEK and γ-secretase inhibition shows synergy in MPNST cell lines. Conclusions We identified PRC2-regulated genes and potential drivers of MPNSTs. Our findings support the Notch pathway as a druggable target in MPNSTs. Our identification of PRC2-regulated genes and pathways could result in more novel therapeutic approaches.