Genomic rearrangements are a hallmark of most childhood tumors, including medulloblastoma, one of the most common brain tumors in children, but their causes remain largely unknown. Here, we show that PiggyBac transposable element derived 5 (Pgbd5) promotes tumor development in multiple developmentally accurate mouse models of Sonic Hedgehog (SHH) medulloblastoma. Most Pgbd5-deficient mice do not develop tumors, while maintaining normal cerebellar development. Ectopic activation of SHH signaling is sufficient to enforce cerebellar granule cell progenitor-like cell states, which exhibit Pgbd5-dependent expression of distinct DNA repair and neurodevelopmental factors. Mouse medulloblastomas expressing Pgbd5 have increased numbers of somatic structural DNA rearrangements, some of which carry PGBD5-specific sequences at their breakpoints. Similar sequence breakpoints recurrently affect somatic DNA rearrangements of known tumor suppressors and oncogenes in medulloblastomas in 329 children. This identifies PGBD5 as a medulloblastoma mutator and provides a genetic mechanism for the generation of oncogenic DNA rearrangements in childhood cancer.