Alveolar rhabdomyosarcoma is a pediatric soft-tissue tumor that is often difficult to distinguish from other small round-cell tumors. The PAX3-FKHR and PAX7-FKHR gene fusions that result from chromosomal translocations in this tumor provide potential molecular diagnostic markers. To apply these molecular markers to commonly available archival material, we used reverse transcriptase-polymerase chain reaction and oligonucleotide hybridization methodology to develop an assay capable of identifying PAX3-FKHR and PAX7-FKHR fusion transcripts in formalin-fixed, paraffin-embedded tissue. Use of a control assay for wild-type FKHR mRNA indicated that RNA was successfully isolated, reverse-transcribed, and amplified in 15 of 16 archival cases. Comparison of assay results for the PAX3-FKHR and PAX7-FKHR fusions with standard molecular assays of paired frozen material revealed that all eight cases of known fusion-positive rhabdomyosarcoma were correctly identified and distinguished as PAX3-FKHR or PAX7-FKHR. The seven cases of known fusion-negative rhabdomyosarcoma showed no evidence of either product. These results indicate that we have developed a molecular assay that accurately identifies the fusion transcripts characteristic of alveolar rhabdomyosarcoma in archival samples. This assay will be useful for diagnosis and for retrospective clinicopathologic correlative studies.