Schwann cells derived from peripheral nerve sheath tumors from individuals with Neurofibromatosis Type 1 (NF1) are deficient for the protein neurofibromin, which contains a GAP-related domain (NF1-GRD). Neurofibromin-deficient Schwann cells have increased Ras activation, increased proliferation in response to certain growth stimuli, increased angiogenic potential, and altered cell morphology. This study examined whether expression of functional NF1-GRD can reverse the transformed phenotype of neurofibromin-deficient Schwann cells from both benign and malignant peripheral nerve sheath tumors. We reconstituted the NF1-GRD using retroviral transduction and examined the effects on cell morphology, growth potential, and angiogenic potential. NF1-GRD reconstitution resulted in morphologic changes, a 16–33% reduction in Ras activation, and a 53% decrease in proliferation in neurofibromin-deficient Schwann cells. However, NF1-GRD reconstitution was not sufficient to decrease the in vitro angiogenic potential of the cells. This study demonstrates that reconstitution of the NF1-GRD can at least partially reverse the transformation of human NF1 tumor-derived Schwann cells.