Abstract Glioblastoma (GBM), the most malignant and aggressive primary brain tumor, is driven by both intrinsic genetic mutations and extrinsic factors from the tumor microenvironment (TME). GBM manipulates the TME to enhance its survival and proliferation through mechanisms such as forming functional synapses with adjacent normal cells and secreting immunosuppressive factors. Our laboratory has developed a novel human organoid tumor transplantation (HOTT) model, which allows for the interrogation of tumor-normal cell crosstalk at a molecular level and facilitates the dissection of specific signaling pathways that drive tumor progression and maintenance. Using single-cell transcriptomics on human GBM HOTTs, we identified the PTN-PTPRZ1 ligand-receptor interaction as a critical mediator of tumor-microenvironment communication. PTPRZ1, a receptor tyrosine phosphatase, has been previously implicated in glioma cell migration, and our data further elucidate its role in modulating tumor behavior. Specifically, we demonstrated that knockdown of PTPRZ1 within the TME of human cortical organoids significantly enhances glioma cell migration and inhibits differentiation, underscoring the essential role of PTPRZ1 in maintaining the tumor’s invasive phenotype. Further pharmacological inhibition of PTPRZ1’s catalytic activity with a small molecule revealed that these effects on cell fate determination are independent of its phosphatase activity. This suggests that PTPRZ1 exerts critical non-catalytic functions that are pivotal for GBM progression. To further investigate these non-catalytic mechanisms, we propose utilizing single-cell transcriptomics coupled with proximity labeling and proteomics. This approach will allow us to comprehensively map PTPRZ1-mediated signaling networks and elucidate their impact on tumor biology, potentially unveiling novel therapeutic targets. Our findings revealed a novel axis of GBM biology mediated by PTPRZ1 and highlighted the importance of considering microenvironmental interactions in the development of effective therapeutics for GBM.