Our recent studies have shown that the FoxM1B transcription factor is overexpressed in human glioma tissues and that the level of its expression correlates directly with glioma grade. However, whether FoxM1B plays a role in the early development of glioma (i.e., in transformation) is unknown. In this study, we found that the FoxM1B molecule causes cellular transformation and tumor formation in normal human astrocytes (NHA) immortalized by p53 and pRB inhibition. Moreover, brain tumors that arose from intracranial injection of FoxM1B-expressing immortalized NHAs displayed glioblastoma multiforme (GBM) phenotypes, suggesting that FoxM1B overexpression in immortalized NHAs not only transforms the cells but also leads to GBM formation. Mechanistically, our results showed that overexpression of FoxM1B upregulated NEDD4-1, an E3 ligase that mediates the degradation and downregulation of phosphatase and tensin homologue (PTEN) in multiple cell lines. Decreased PTEN in turn resulted in the hyperactivation of Akt, which led to phosphorylation and cytoplasmic retention of FoxO3a. Blocking Akt activation with phosphoinositide 3-kinase/Akt inhibitors inhibited the FoxM1B-induced transformation of immortalized NHAs. Furthermore, overexpression of FoxM1B in immortalized NHAs increased the expression of survivin, cyclin D1, and cyclin E, which are important molecules for tumor growth. Collectively, these results indicate that overexpression of FoxM1B, in cooperation with p53 and pRB inhibition in NHA cells, promotes astrocyte transformation and GBM formation through multiple mechanisms.