A subset of sarcomas is characterised by recurrent chromosome translocations that generate novel fusion oncoproteins. One or both of the genes involved in these translocations often encode transcription factors, and the resulting fusion proteins have aberrant transcriptional function compared to their wild-type counterparts. These fusion transcription factors disrupt multiple biological pathways by altering expression of target genes, and thereby result in a variety of altered cellular properties that contribute to the tumourigenic process. However, experimental data indicate that the fusion gene alone is not sufficient for transformation in primary cells (EWS-FLI1) or tumourigenesis in the mouse (PAX3-FKHR, FUS-CHOP), suggesting that additional collaborating genetic alterations are required. In addition to improving our understanding of the etiology of these tumours, this accumulating knowledge of the oncogenic properties of these fusion proteins, their downstream targets, and cooperating genetic alterations will permit the development of a variety of novel approaches to improve the therapy of these cancers.