The fusion oncoproteins PAX3-FOXO1 [t(2;13)(q35;q14)] and PAX7-FOXO1 [t(1;13)(p36;q14)] typify alveolar rhabdomyosarcoma (ARMS); however, 20-30% of cases lack these specific translocations. In this study, cytogenetic and/or molecular characterization to include FISH, reverse transcription polymerase chain reaction (RT-PCR), and sequencing analyses of five rhabdomyosarcomas [four ARMS and one embryonal rhabdomyosarcoma (ERMS)] with novel, recurrent t(2;2)(p23;q35) or t(2;8)(q35;q13) revealed that these noncanonical translocations fuse PAX3 to NCOA1 or NCOA2, respectively. The PAX3-NCOA1 and PAX3-NCOA2 transcripts encode chimeric proteins composed of the paired-box and homeodomain DNA-binding domains of PAX3, and the CID domain, the Q-rich region, and the activation domain 2 (AD2) domain of NCOA1 or NCOA2. To investigate the biological function of these recurrent variant translocations, the coding regions of PAX3-NCOA1 and PAX3-NCOA2 cDNA constructs were introduced into expression vectors with tetracycline-regulated expression. Both fusion proteins showed transforming activity in the soft-agar assay. Deletion of the AD2 portion of the PAX3-NCOA fusion proteins reduced the transforming activity of each chimeric protein. Similarly, but with greater impact, CID domain deletion fully abrogated the transforming activity of the chimeric protein. These studies (1) expand our knowledge of PAX3 variant translocations in RMS with identification of a novel PAX3-NCOA2 fusion, (2) show that both PAX3-NCOA1 and PAX3-NCOA2 represent recurrent RMS rearrangements, (3) confirm the transforming activity of both translocation events and demonstrate the essentiality of intact AD2 and CID domains for optimal transforming activity, and (4) provide alternative approaches (FISH and RT-PCR) for detecting PAX-NCOA fusions in nondividing cells of RMS. The latter could potentially be used as aids in diagnostically challenging cases.