Rhabdomyosarcoma (RMS) is the most common soft tissue sarcoma in children and accounts for about 5% of all malignant paediatric tumours. β-Catenin, a multifunctional nuclear transcription factor in the canonical Wnt signaling pathway, is active in myogenesis and embryonal somite patterning. Dysregulation of Wnt signaling facilitates tumour invasion and metastasis. This study characterizes Wnt/β-catenin signaling and functional activity in paediatric embryonal and alveolar RMS. Immunohistochemical assessment of paraffin-embedded tissues from 44 RMS showed β-catenin expression in 26 cases with cytoplasmic/membranous expression in 9/14 cases of alveolar RMS, and 15/30 cases of embryonal RMS, whereas nuclear expression was only seen in 2 cases of embryonal RMS. The potential functional significance of β-catenin expression was tested in four RMS cell lines, two derived from embryonal (RD and RD18) RMS and two from alveolar (Rh4 and Rh30) RMS. Western blot analysis demonstrated the expression of Wnt-associated proteins including β-catenin, glycogen synthase kinase-3β, disheveled, axin-1, naked, LRP-6 and cadherins in all cell lines. Cell fractionation and immunofluorescence studies of the cell lines (after stimulation by human recombinant Wnt3a) showed reduced phosphorylation of β-catenin, stabilization of the active cytosolic form and nuclear translocation of β-catenin. Reporter gene assay demonstrated a T-cell factor/lymphoid-enhancing factor-mediated transactivation in these cells. In response to human recombinant Wnt3a, the alveolar RMS cells showed a significant decrease in proliferation rate and induction of myogenic differentiation (myogenin, MyoD1 and myf5). These data indicate that the central regulatory components of canonical Wnt/β-catenin signaling are expressed and that this pathway is functionally active in a significant subset of RMS tumours and might represent a novel therapeutic target.