Rhabdomyosarcoma, a cancer of skeletal muscle lineage, is the most common soft-tissue sarcoma in children. Major subtypes of rhabdomyosarcoma include alveolar (ARMS) and embryonal (ERMS) tumors. Whereas ARMS tumors typically contain translocations generating PAX3-FOXO1 or PAX7-FOXO1 fusions that block terminal myogenic differentiation, no functionally comparable genetic event has been found in ERMS tumors. Here we report the discovery, through whole-exome sequencing, of a recurrent somatic mutation encoding p.Leu122Arg in the myogenic transcription factor MYOD1 in a distinct subset of ERMS tumors with poor outcomes that also often contain mutations altering PI3K-AKT pathway components. Previous mutagenesis studies had shown that MYOD1 with a p.Leu122Arg substitution can block wild-type MYOD1 function and bind to MYC consensus sequences, suggesting a possible switch from differentiation to proliferation. Our functional data now confirm this prediction. Thus, MYOD1 p.Leu122Arg defines a subset of rhabdomyosarcomas eligible for high-risk protocols and the development of targeted therapeutics.