Wilms tumor (WT) is the most frequent renal neoplasm of childhood; a myogenic component is observed in 5% to 10% of tumors. We demonstrate for the first time that myogenic WTs are associated with expression of PAX3, a transcription factor known to specify myoblast cell fate during muscle development. In a panel of 20 WTs, PAX3 was identified in 13 of 13 tumor samples with myogenic histopathology but was absent in 7 of 7 tumors lacking a myogenic component. Furthermore, we show that PAX3 is expressed in the metanephric mesenchyme and stromal compartment of developing mouse kidney. Modulation of endogenous PAX3 expression in human embryonic kidney (HEK293) cells influenced cell migration in in vitro assays. Mutations of WT1 were consistently associated with PAX3 expression in WTs, and modulation of WT1 expression in HEK293 cells was inversely correlated with the level of endogenous PAX3 protein. We demonstrate abundant PAX3 and absence of PAX2 expression in a novel cell line (WitP3) isolated from the stromal portion of a WT bearing a homozygous deletion of the WT1 gene. We hypothesize that PAX3 sets stromal cell fate in developing kidney but is normally suppressed by WT1 during the mesenchyme-to-epithelium transition leading to nephrogenesis. Loss of WT1 permits aberrant PAX3 expression in a subset of WTs with myogenic phenotype.