Rhabdomyosarcoma (RMS) is the most common soft tissue malignancy in childhood and adolescence. The two major histological subtypes of RMS are alveolar RMS, driven by the fusion protein PAX3-FKHR or PAX7-FKHR, and embryonic RMS, which is usually genetically heterogeneous. The prognosis of RMS has improved in the past several decades due to multidisciplinary care. However, in recent years, the treatment of patients with metastatic or refractory RMS has reached a plateau. Thus, to improve the survival rate of RMS patients and their overall well-being, further understanding of the molecular and cellular biology of RMS and identification of novel therapeutic targets are imperative. In this review, we describe the most recent discoveries in the molecular and cellular biology of RMS, including alterations in oncogenic pathways, miRNA (miR), in vivo models, stem cells, and important signal transduction cascades implicated in the development and progression of RMS. Furthermore, we discuss novel potential targeted therapies that may improve the current treatment of RMS.