Dysregulation of protein kinase A (PKA) activity, caused by loss of function mutations in PRKAR1A, is known to induce tumor formation in the inherited tumor syndrome Carney complex (CNC) and is also associated with sporadic tumors of the thyroid and adrenal. We have previously shown that Prkar1a+/− mice develop schwannomas reminiscent of those seen in CNC and that similar tumors are observed in tissue-specific knockouts (KO) of Prkar1a targeted to the neural crest. Within these tumors, we have previously described the presence of epithelial islands, although the nature of these structures was unclear. In this article, we report that these epithelial structures are derived from KO cells originating in the neural crest. Analysis of the mesenchymal marker vimentin revealed that this protein was markedly down-regulated not only from the epithelial islands, but also from the tumor as a whole, consistent with mesenchymal-to-epithelial transition (MET). In vitro, Prkar1a null primary mouse embryonic fibroblasts, which display constitutive PKA signaling, also showed evidence for MET, with a loss of vimentin and up-regulation of the epithelial marker E-cadherin. Reduction of vimentin protein occurred at the posttranslational level and was rescued by proteasomal inhibition. Finally, this down-regulation of vimentin was recapitulated in the adrenal nodules of CNC patients, confirming an unexpected and previously unrecognized role for PKA in MET. [Cancer Res 2008;68(8):2671–7]