A 14-year-old boy presented with a soft tissue swelling on the outer aspect of his left upper arm. Examination of the tumor by light microscopy showed a small round cell tumor with a rare focus of myogenic differentiation. Myogenic differentiation was confirmed on ultrastructural examination by immunohistochemistry and reverse transcriptase polymerase chain reaction (RT-PCR). Conventional G-banding and fluorescent in situ hybridization (FISH) demonstrated a complex variant of t(21;22)(q22;q12). By RT-PCR, the EWS-ERG fusion transcript was defined as type 9e. This tumor was unusual in that it showed characteristics of myogenic and neural differentiation, and contained a rearrangement of the EWS gene consistent with a diagnosis of Ewing's sarcoma. This supports the hypothesis that a class of biphenotypic childhood sarcomas, with features of myogenic and neural differentiation, exists that may be related to the Ewing's sarcoma family of tumors.