Neuronal activity is emerging as a driver of central and peripheral nervous system cancers. Here, we examined neuronal physiology in mouse models of the tumor predisposition syndrome Neurofibromatosis-1 (NF1), with different propensities to develop nervous system cancers. We show that central and peripheral nervous system neurons from mice with tumor-causing Nf1 gene mutations exhibit hyperexcitability and increased secretion of activity-dependent tumor-promoting paracrine factors. We discovered a neurofibroma mitogen (COL1A2) produced by peripheral neurons in an activity-regulated manner, which increases NF1-deficient Schwann cell proliferation, establishing that neurofibromas are regulated by neuronal activity. In contrast, mice with the Arg1809Cys Nf1 mutation, found in NF1 patients lacking neurofibromas or optic gliomas, do not exhibit neuronal hyperexcitability or develop these NF1-associated tumors. The hyperexcitability of tumor-prone Nf1-mutant neurons results from reduced NF1-regulated hyperpolarization-activated cyclic nucleotide-gated (HCN) channel function, such that neuronal excitability, activity-regulated paracrine factor production, and tumor progression are attenuated by HCN channel activation. Collectively, these findings reveal that NF1 mutations act at the level of neurons to modify tumor predisposition by increasing neuronal excitability and activity-regulated paracrine factor production.