Rhabdomyosarcoma (RMS) is a soft tissue sarcoma categorized into two major subtypes: alveolar RMS (ARMS) and embryonal RMS (ERMS). Most ARMS express the PAX3-FOXO1 (P3F) fusion oncoprotein generated by the 2;13 chromosomal translocation. In the present study, the downstream target genes of P3F were identified by analyzing two independent sets of gene expression profiles: primary RMS tumors and RD ERMS cells transduced with inducible P3F constructs. We found 34 potential target genes (27 upregulated and 7 downregulated) that were significantly and differentially expressed between P3F-positive and P3F-negative categories, both in primary RMS tumors and in the inducible P3F cell culture system. Gene ontology analysis of microarray data of the inducible P3F cell culture system employed indicated apoptosis, cell death, development, and signal transduction as overrepresented significant functional categories found in both upregulated and downregulated genes. Therefore, among the 34 potential target genes, the expression of cell death‑related [Gremlin1, cysteine knot superfamily 1, BMP antagonist 1 (GREM1) and death-associated protein kinase 1 (DAPK1)] and development‑related [myogenic differentiation 1 (MYOD1) and hairy/enhancer-of-split related with YRPW motif 1 (HEY1)] genes were further investigated. The differential expression of GREM1, DAPK1, MYOD1 and HEY1 was confirmed in independent tumors and inducible cell culture systems. The expression of GREM1, DAPK1 and MYOD1 were significantly upregulated; HEY1 was significantly downregulated in independent P3F-positive ARMS tumors and transcriptionally active P3F cells, compared to those in ERMS tumors and transcriptionally inactive P3F cells. This study identified target genes of P3F and suggested that four downstream targets (GREM1, DAPK1, MYOD1 and HEY1) can contribute to the biological activities of P3F involved in growth suppression or cell death and myogenic differentiation.