Ewing sarcoma family of tumors share recurrent translocations that fuse EWS from 22q12 to five different members of transcription factors namely FLI-1, ERG, ETV1, E1AF and FEV. Different classes of DNA binding proteins, ATF1, WT1 and CHOP are fused to EWS generating distinct tumor phenotypes: clear cell sarcoma, desmoplastic small round cell tumor, and myxoid liposarcoma, respectively. We have cloned a novel gene located at 22q12 fused to EWS by a submicroscopic inversion of 22q in a small round cell sarcoma showing a translocation (t(1;22)(p36.1;q12). The gene, designated ZSG (Zinc finger Sarcoma Gene), is a putative Cys2-His2 zinc finger protein which contains a POZ transcriptional repressor-like domain at the N-terminus. The rearrangement involves intron 8 of EWS and exon 1 of ZSG creating a chimeric sequence containing the transactivation domain of EWS fused to zinc finger domain of ZSG. This product lacks the transcriptional repressor domain at the N-terminus of ZSG. A rearrangement of the second ZSG allele was also found in tumor cells. This is the first example of an intra-chromosomal rearrangement of chromosome 22, undetectable by cytogenetics, activating EWS in soft tissue sarcoma.