Rhabdomyosarcoma cells express the myogenic helix-loop-helix proteins of the MyoD family but do not differentiate into skeletal muscle cells. Gel shift and transient transfection assays revealed that MyoD in the rhabdomyosarcoma cells was capable of binding DNA but was relatively nonfunctional as a transcriptional activator. Heterokaryon formation with fibroblasts resulted in the restoration of transcriptional activation by MyoD and the differentiation of the rhabdomyosarcoma cells into skeletal muscle cells. These results suggest that rhabdomyosarcomas are deficient in a factor required for MyoD activity.