Ewing's sarcoma (ES) and primitive neuroectodermal tumor (PNET) are members of a tumor family consistently associated with chromosomal translocation and functional fusion of the EWS gene to any of several structurally related transcription factor genes. Similar gene fusion events occur in other mesenchymal and hematopoietic tumors and are tumor-specific. The resulting novel transcription factor-like chimeric proteins are believed to contribute to tumor biology by aberrant regulation of gene expression altering critical controls of cell proliferation and differentiation. These tumor-specific molecular rearrangements are useful for primary diagnosis, may provide prognostic information, and present potential therapeutic targets. The recent advances in our understanding of the molecular biology of ES and PNET represent a paradigm for the application of the basic biology of neoplasia to clinical management of patients.