ABSTRACT: Many rare cancers are not well understood, and pathogenesis-directed therapies are often lacking, resulting in poor patient outcomes. Leveraging two (inter)national precision oncology trials that enroll large numbers of rare cancers, we investigated the clinical, histopathologic, molecular, and functional characteristics of rhabdomyosarcoma (RMS) with fusions of FUS or EWSR1 to the TFCP2 transcription factor, a recently discovered ultra-rare entity whose classification, pathogenesis, and optimal treatment are unclear. Unusually for fusion-driven sarcomas, most cases had highly rearranged genomes, including chromothripsis, and signs of defective homologous recombination DNA repair. All tumors showed extreme expression of a truncated TERT variant and the ALK receptor tyrosine kinase, which was additionally affected by intragenic deletions and aberrant splicing, resulting in the expression of shortened variants in 58% of cases. Three ALK variants were oncogenic in immortalized cells, and patient-derived tumor cells expressing two variants responded to certain ALK inhibitors. Other recurrent alterations included CDKN2A/MTAP co-deletions and mutations in PAPPA2, encoding an IGFBP5-specific proteinase, in 67% and 25% of cases, respectively. DNA methylation analysis, along with 19 other soft-tissue sarcoma classes, revealed a close relationship with undifferentiated sarcoma but not other RMS subtypes, suggesting that TFCP2-rearranged RMS is a separate entity, possibly arising from a distinct cell of origin. Expression of TFCP2 fusions in immortalized human cells blocked late myogenic differentiation and significantly induced genes that were also highly expressed in patient tumors, including ALK, TERT, and two known regulators of skeletal muscle cells, IGFBP5 and PTH1R. Genome-wide chromatin profiling demonstrated direct binding of FUS-TFCP2 to the ALK and TERT loci outside their regular promoters, which correlated with the expression of alternative transcript variants. Finally, FUS-TFCP2 inhibited the repair of DNA double-strand breaks in immortalized cells, rendering them sensitive to treatment with cisplatin. This study provides insight into the pathogenesis and therapeutic vulnerabilities of a new RMS subtype and illustrates the value of linking comprehensive molecular diagnostics and functional annotation within multicenter consortia to improve the understanding and clinical management of rare cancers.