Neurofibromatosis type 1 (NF1) is among the most common genetic disorders of humans and is caused by loss of neurofibromin, a large and highly conserved protein whose only known function is to serve as a GTPase-Activating Protein (GAP) for Ras. However, most Drosophila NF1 mutant phenotypes, including an overall growth deficiency, are not readily modified by manipulating Ras signaling strength, but are rescued by increasing signaling through the cAMP-dependent protein kinase A pathway. This has led to suggestions that NF1 has distinct Ras- and cAMP-related functions. Here we report that the Drosophila NF1 growth defect reflects a non-cell-autonomous requirement for NF1 in larval neurons that express the R-Ras ortholog Ras2, that NF1 is a GAP for Ras1 and Ras2, and that a functional NF1-GAP catalytic domain is both necessary and sufficient for rescue. Moreover, a Drosophila p120RasGAP ortholog, when expressed in the appropriate cells, can substitute for NF1 in growth regulation. Our results show that loss of NF1 can give rise to non-cell-autonomous developmental defects, implicate aberrant Ras-mediated signaling in larval neurons as the primary cause of the NF1 growth deficiency, and argue against the notion that neurofibromin has separable Ras- and cAMP-related functions.