The malignancy of alveolar rhabdomyosarcoma (ARMS) has been linked to expression of the PAX3-FKHR chimeric gene. To understand the effect of this gene, we used RNAi to knock down its expression (without affecting the expressions of either PAX3 or FKHR) in human ARMS cell lines. Down-regulating PAX3-FKHR caused (a) tumor cells to accumulate in the G1 phase, inhibiting the rate of cellular proliferation, (b) a reduction in the levels of the MET, reducing cell motility stimulated by HGF, and (c) induction of the myogenic differentiation gene, myogenin, and muscle differentiation (morphologic change and the expression of muscle specific proteins, desmin, and myosin heavy chain). These results suggest that PAX3-FKHR in ARMS cells promotes malignant phenotypes such as proliferation, motility, and to suppress differentiation.