Amplification of the oncogene MYCN is a tumorigenic event in the development of a subset of neuroblastomas that commonly consist of undifferentiated or poorly differentiated neuroblasts with unfavorable clinical outcome. The cellular origin of these neuroblasts is unknown. Additionally, the cellular functions and target cells of MYCN in neuroblastoma development remain undefined. Here we examine the cell types that drive neuroblastoma development in TH-MYCN transgenic mice, an animal model of the human disease. Neuroblastoma development in these mice begins with hyperplastic lesions in early postnatal sympathetic ganglia. We show that both hyperplasia and primary tumors are composed predominantly of highly proliferative Phox2B(+) neuronal progenitors. MYCN induces the expansion of these progenitors by both promoting their proliferation and preventing their differentiation. We further identify a minor population of undifferentiated nestin(+) cells in both hyperplastic lesions and primary tumors that may serve as precursors of Phox2B(+) neuronal progenitors. These findings establish the identity of neuroblasts that characterize the tumor phenotype and suggest a cellular pathway by which MYCN can promote neuroblastoma development.