This review examines how the identification of tumor-specific translocations and fusion proteins has advanced the basic scientific and clinical understanding of sarcomas. Recent genetic advances, including the ASPL-TFE3 fusion of alveolar soft part sarcoma, the JAZF1-JJAZ1 fusion of endometrial stromal sarcoma, and HMGIC fusions in liposarcoma, are discussed. Next, the review addresses the ways in which molecular genetic data have influenced diagnostic and prognostic paradigms. For example, recent studies describe the detection of occult tumor cells and the identification of primary renal neoplasms that are genetically related to alveolar soft part sarcoma. In addition, the review discusses potential therapies based on the targeting of sarcoma-specific fusion proteins. These reports describe the potential use of Gleevec (STI571) for dermatofibrosarcoma protuberans and the use of tumor-specific fusion proteins as potential targets for immunotherapy. Finally, basic scientific findings are reviewed that elucidate, for example, the aberrant functions of SYT-SSX in chromatin remodeling and of EWS-FLI1 in transcription and mRNA splicing. These and other emerging models of tumorigenesis will help identify new therapeutic targets.