Alveolar rhabdomyosarcoma (ARMS) is associated with chromosomal translocations that generate PAX3-FKHR and PAX7-FKHR fusion oncoproteins. Based on studies demonstrating that high PAX3-FKHR expression causes growth suppression, the hypothesis is proposed that, during ARMS tumorigenesis, the translocations cause low oncoprotein expression and are followed by collaborating events that block growth suppression pathways and permit upregulation of oncoprotein expression. To investigate oncogenic function at low expression levels, PAX3-FKHR was introduced into NIH3T3 cells in the pBabe retroviral vector. Compared to high expression systems, PAX3-FKHR expression from pBabe was lower and did not suppress growth, but showed transforming activity in the soft agar assay. As a possible collaborating event, PAX3-FKHR paired box mutations were previously shown in high expression systems to reverse growth suppressive effects. In the low expression system, the paired box mutation enhanced transformation in soft agar and focus formation assays. Although these mutations are candidate collaborating events, sequencing of paired box regions in ARMS tumors did not identify mutations. Finally, genes from known genetic alterations in ARMS were introduced, alone or combined, into NIH3T3 cells with high PAX3-FKHR expression and did not rescue growth suppression. In summary, these studies provide a model for an event in ARMS tumorigenesis that enhances PAX3-FKHR oncogenicity and abrogates growth suppression, but do not demonstrate a known event occurring in ARMS tumors that fulfills these criteria.