Rhabdomyosarcoma is a soft tissue sarcoma arising from cells of a mesenchymal or skeletal muscle lineage. Alveolar rhabdomyosarcoma (ARMS) is more aggressive than the more common embryonal (ERMS) subtype. ARMS is more prone to metastasis and carries a poorer prognosis. In contrast to ERMS, the majority of ARMS tumors carry one of several characteristic chromosomal translocations, such as t(2;13)(q35;q14), which results in the expression of a PAX3-FOXO1 fusion transcription factor. In this review we discuss the genes that cooperate with PAX3-FOXO1, as well as the target genes of the fusion transcription factor that contribute to various aspects of ARMS tumorigenesis. The characterization of these pathways will lead to a better understanding of ARMS tumorigenesis and will allow the design of novel targeted therapies that will lead to better treatment for this aggressive pediatric tumor.