Sarcomas are the mesenchymal-derived malignant tumors of connective tissues (e.g., fat, bone, and cartilage) presumed to arise from aberrant development or differentiation of mesenchymal stem cells (MSCs). Appropriate control of stem cell maintenance versus differentiation allows for normal connective tissue development. Current theories suggest that loss of this control--through accumulation of genetic lesions in MSCs at various points in the differentiation process--leads to development of sarcomas, including undifferentiated, high grade sarcoma tumors. The initiation of stem cell differentiation is highly associated with alteration of gene expression, which depends on chromatin remodeling. Epigenetic chromatin modifying agents have been shown to induce cancer cell differentiation and are currently being used clinically to treat cancer. This review will focus on the importance of epigenetic chromatin remodeling in the context of mesenchymal stem cells, sarcoma tumorigenesis and differentiation therapy.