Alveolar rhabdomyosarcoma (ARMS) are characterized by the expression of chimeric transcription factors Pax3-FKHR and Pax7-FKHR, due to chromosomal translocations fusing PAX3 or PAX7 with the FKHR gene. Although ARMS exhibits a muscle lineage phenotype, the cells evade terminal differentiation despite expressing the potent myogenic transcriptional regulator MyoD. Here we show that while Pax7-FKHR inhibits MyoD-dependent transcription, MyoD enhances Pax7-FKHR activity in myogenic cell cultures. Importantly, this effect is not recapitulated by close related transcription factor myogenin and involves specific MyoD functional domains, distinct from those required for Pax7 to regulate MyoD during muscle formation. Together, these results suggest that although repressed as a myogenic regulatory factor, MyoD can play an active role in ARMS by augmenting Pax7-FKHR function. J. Cell. Biochem. 112: 1410-1417, 2011. (C) 2011 Wiley-Liss, Inc.