The t(2;13) chromosomal translocation occurs at a high frequency in alveolar rhabdomyosarcoma, a common pediatric tumor of muscle. This translocation results in the production of a chimeric fusion protein derived from two developmentally regulated transcription factors, PAX3 and FKHR. The two DNA binding modules, the paired domain and the homeodomain, of PAX3 are fused in frame to the transactivation domain of FKHR. Previously, tumor-specific PAX3-FKHR has been shown to bind to DNA sequences normally recognized by wild-type PAX3 and to exhibit relatively enhanced transcriptional activity. The DNA binding sites used to demonstrate that PAX3-FKHR is a more potent transcriptional activator than PAX3 have included recognition sequences for the paired domain of PAX3. In this report, we demonstrate the ability of PAX3-FKHR to activate the product of a growth control gene, platelet-derived growth factor alpha receptor (PDGFalphaR), by recognizing a paired-type homeodomain binding site located in the PDGFalphaR promoter. PAX3 alone cannot mediate transcriptional activation of this promoter under the conditions tested. This provides the first evidence that chromosomal translocation results in altered target gene specificity of PAX3-FKHR and suggests a transcriptional target that may play a significant role in oncogenic activity and rhabdomyosarcoma development.