Medulloblastoma, the most common of the malignant pediatric brain tumors, is a group of four molecularly and clinically distinct cancers with different cells of origin. One of these medulloblastoma groups displays activation of Sonic hedgehog (SHH) signaling and originates from granule cell precursors of the developing cerebellum. Ongoing basic and clinical research efforts are tailored to discover targeted and safer therapies, which rely on the identification of the basic mechanisms regulating tumor initiation, progression, and metastasis. In SHH medulloblastoma, the mechanisms regulating neural progenitor transformation and progression to advanced tumors have been studied in some detail. The present review discusses recent advances on medulloblastoma progression derived from studies using mouse models of SHH medulloblastoma. We focus on mechanisms that regulate progression from precancerous lesions to medulloblastoma, describing novel roles played by tumor suppressor mechanisms and the tumor microenvironment.