Lineage or cell of origin of cancers is often unknown and thus is not a consideration in therapeutic approaches. Alveolar rhabdomyosarcoma (aRMS) is an aggressive childhood cancer for which the cell of origin remains debated. We used conditional genetic mouse models of aRMS to activate the pathognomonic Pax3:Foxo1 fusion oncogene and inactivate p53 in several stages of prenatal and postnatal muscle development. We reveal that lineage of origin significantly influences tumor histomorphology and sensitivity to targeted therapeutics. Furthermore, we uncovered differential transcriptional regulation of the Pax3:Foxo1 locus by tumor lineage of origin, which led us to identify the histone deacetylase inhibitor entinostat as a pharmacological agent for the potential conversion of Pax3:Foxo1-positive aRMS to a state akin to fusion-negative RMS through direct transcriptional suppression of Pax3:Foxo1.