Vestibular schwannomas (VS) are tumors arising from cranial nerve Schwann cells that cause significant morbidity and are treated with surgery and irradiation. We describe a DNA methylation-based classification of VS into neural crest and immune enriched subgroups and validate our findings using bulk and single cell transcriptomics. Neural crest enriched VS express primary cilia and are associated with misactivation of the Hedgehog pathway. Irradiation epigenetically reprograms VS cells to reduce ciliary length, attenuate Hedgehog signaling, and induce cellular stress mechanisms that recruit lymphocytes and macrophages, transforming recurrent tumors in pairs of patient-matched samples from neural crest to immune enriched VS. Using single cell transcriptomics, we develop a VS cell atlas and identify a diversity of schwannoma and non-schwannoma cell-types that resemble different stages of nerve injury and regeneration. These data elucidate the molecular pathways underlying VS and establish a framework for understanding how irradiation modulates the tumor microenvironment.