Abstract Adamantinomatous Craniopharyngioma (ACP) is a rare pituitary tumor of the sellar region, with a bimodal presentation pattern in children and middle-aged adults. ACPs are primarily driven by a mutation in CTNNB1 that prevents beta-catenin from degrading properly, resulting in accumulation in the nuclei of epithelial whorl-like structures sometimes referred to as cluster cells. Clinical management is challenging due to the location of the tumor, such that complete surgical resection is often not possible so radiation therapy, which can lead to high morbidity, is also used. Greater insight into these tumors can help develop less damaging treatment strategies. In this analysis we have employed single-cell RNA sequencing technology to examine seven pediatric human ACPs (28594 cells). Using consensus non-negative matrix factorization, and traditional marker genes, we have partitioned our dataset into several cell types including cluster cells, palisading epithelial cells, microglia, T-cells, B-cells, plasma cells, and fibroblasts. Though cluster cells themselves do not actively proliferate, we believe the complex inter-cellular signaling is responsible for tumor formation. We propose a model in which malignant fibroblasts form from the existing epithelium and remodel the extracellular matrix (ECM) creating a stiffened tumor microenvironment. To support this claim we show activation markers suggesting myofibroblast differentiation, the expression of EMT signatures indicating a transformation from epithelial to fibroblast, and RNA velocity analysis that demonstrates lineage tracing. We believe that the remodeling of the ECM is a wound healing response influenced by TGF-beta, SPP1, and other signaling pathways. Our analysis of ACPs reveals the role of the tumor microenvironment in the formation of these tumors.