The CCN (Cy61, CTGF and NOV) family of proteins is a group of matricellular biomolecules involved in both physiological and pathological processes. Elevated expression of the CCN3 (also known as NOV, Nephroblastoma overexpressed) gene has been detected in clinical samples of the skeletal muscle cancer rhabdomyosarcoma, with the highest expression found in the alveolar subtype (aRMS). Over 80% of aRMSs are characterized by a chromosomal translocation-derived fusion transcription factor PAX3-FKHR. In this study, we linked elevated CCN3 levels in aRMS cells to PAX3-FKHR expression. We found reduced CCN3 levels in aRMS cells following small interfering RNA knockdown of PAX3-FKHR, and increased CCN3 levels in C2 myoblasts following ectopic expression of PAX3-FKHR. Promoter, electrophoretic mobility shift assay and chromatin immunoprecipitation analyses confirmed that the CCN3 gene was a direct target for PAX3-FKHR transcriptional activation through a paired-domain DNA sequence in the first intron of the CCN3 gene. To determine the function of CCN3, we showed that knockdown and ectopic expression of CCN3 decreased survival and increased differentiation in aRMS cells, respectively. In addition, we found that exogenously supplied CCN3 protein promoted aRMS cell adhesion, migration and Matrigel invasion. Taken together, data from this study have (1) provided a mechanistic basis for the CCN3 overexpression in aRMS cells, and (2) identified CCN3 as an autocrine/paracrine factor that contributes to the aggressive behavior of aRMS cells, perhaps through a positive feedback loop. Thus, CCN3 may be an attractive target for therapeutic intervention in aRMS.