PAX7 is a paired-box transcription factor that is required for the developmental specification of adult skeletal muscle progenitors in mice. We previously demonstrated PAX7 expression as a marker of skeletal muscle differentiation in rhabdomyosarcoma. Here, using analyses of published whole-genome gene expression microarray data, we identify PAX7 as a gene with significantly increased expression in Ewing sarcoma in comparison to CIC-DUX4 round cell sarcoma. Analysis of PAX7 in a large cohort of 103 Ewing sarcoma cases by immunohistochemistry revealed expression in 99.0% of cases (102/103). PAX7 expression was noted in cases demonstrating three distinct Ewing sarcoma EWSR1 translocations involving FLI1, ERG, and NFATc2. No PAX7 expression was observed in any of 27 cases of CIC-DUX4 sarcoma by immunohistochemistry (0%; 0/27). Exploring the mechanism of PAX7 expression in Ewing sarcoma using curated RNA- and ChIP-sequencing data, we demonstrate that the EWSR1 fusion protein is required for PAX7 expression in Ewing sarcoma and identify a candidate EWSR1-FLI1-bound PAX7 enhancer that coincides with both a consensus GGAA repeat-containing binding site and a peak of regulatory H3K27 acetylation. Taken together, our findings provide mechanistic support for the utility of PAX7 immunohistochemistry in the diagnosis of Ewing sarcoma, while linking this sarcoma of uncertain histogenesis to a key transcriptional regulator of mammalian muscle progenitor cells.