Elevated levels of PAX3 and cell proliferation genes are characteristic features of rhabdomyosarcoma (RMS). We hypothesize that the increased levels of these genes are stabilized due to downregulation of specific miRNAs. In this study, we show that downregulation of miR-1, -206 and -29 stabilizes the expression of PAX3 and CCND2 in both embryonal (ERMS) and alveolar (ARMS) RMS types. Ectopic expression of miR-1 and 206 in JR1, an ERMS cell line, show significant downregulation of PAX3 protein expression, whereas overexpression of these miRNAs in Rh30, an ARMS cell line, did not show any effect in PAX3 protein levels. In ARMS, PAX3 forms a fusion transcript with FOXO1 and the resultant loss of PAX3 3'UTR in the fusion transcript indicate an oncogenic mechanism to evade miRNA-mediated regulation of PAX3. Further, we show that miR-1, -206 and -29 can regulate the expression of CCND2, a cell cycle gene. In addition to CCND2, miR-29 also targets E2F7, another cell cycle regulator. Cell function analysis shows that overexpression of miR-29 downregulates the expression of these cell cycle genes, induces partial G1 arrest leading to decreased cell proliferation. Taken together our data suggest that the RMS state is stabilized by the deregulation of multiple miRNAs and their target genes, supporting a tumor suppressor role for these miRNA.