Embryonal rhabdomyosarcoma (ERMS) is a childhood cancer that expresses myogenic master regulatory factor MYOD but fails to differentiate. Here, we show that the zinc finger transcription factor CASZ1 up-regulates MYOD signature genes and induces skeletal muscle differentiation in normal myoblasts and ERMS. The oncogenic activation of the RAS-MEK pathway suppresses CASZ1 expression in ERMS. ChIP-seq, ATAC-seq and RNA-seq experiments reveal that CASZ1 directly up-regulates skeletal muscle genes and represses non-muscle genes through affecting regional epigenetic modifications, chromatin accessibility and super-enhancer establishment. Next generation sequencing of primary RMS tumors identified a single nucleotide variant in the CASZ1 coding region that potentially contributes to ERMS tumorigenesis. Taken together, loss of CASZ1 activity, due to RAS-MEK signaling or genetic alteration, impairs ERMS differentiation, contributing to RMS tumorigenesis.