Medulloblastoma is the most common malignant brain tumor in children. A subset of medulloblastoma originates from granule cell precursors (GCPs) of the developing cerebellum and demonstrates aberrant hedgehog signaling, typically due to inactivating mutations in the receptor PTCH1, a pathomechanism recapitulated in Ptch1+/− mice. As nitric oxide may regulate GCP proliferation and differentiation, we crossed Ptch1+/− mice with mice lacking inducible nitric oxide synthase (Nos2) to investigate a possible influence on tumorigenesis. We observed a two-fold higher medulloblastoma rate in Ptch1+/− Nos2−/− mice compared to Ptch1+/− Nos2+/+ mice. To identify the molecular mechanisms underlying this finding, we performed gene expression profiling of medulloblastomas from both genotypes, as well as normal cerebellar tissue samples of different developmental stages and genotypes. Downregulation of hedgehog target genes was observed in postnatal cerebellum from Ptch1+/+ Nos2−/− mice but not from Ptch1+/− Nos2−/− mice. The most consistent effect of Nos2 deficiency was downregulation of growth-associated protein 43 (Gap43). Functional studies in neuronal progenitor cells demonstrated nitric oxide dependence of Gap43 expression and impaired migration upon Gap43 knock-down. Both effects were confirmed in situ by immunofluorescence analyses on tissue sections of the developing cerebellum. Finally, the number of proliferating GCPs at the cerebellar periphery was decreased in Ptch1+/+ Nos2−/− mice but increased in Ptch1+/− Nos2−/− mice relative to Ptch1+/− Nos2+/+ mice. Taken together, these results indicate that Nos2 deficiency promotes medulloblastoma development in Ptch1+/− mice through retention of proliferating GCPs in the external granular layer due to reduced Gap43 expression. This study illustrates a new role of nitric oxide signaling in cerebellar development and demonstrates that the localization of pre-neoplastic cells during morphogenesis is crucial for their malignant progression.