Rhabdomyosarcoma (RMS) is the most common soft tissue sarcoma of childhood with an unmet clinical need for decades. A single oncogenic fusion gene is associated with treatment resistance and a 40 to 45% decrease in overall survival. We previously showed that expression of this PAX3:FOXO1 fusion oncogene in alveolar RMS (aRMS) mediates tolerance to chemotherapy and radiotherapy and that the class I-specific histone deacetylase (HDAC) inhibitor entinostat reduces PAX3:FOXO1 protein abundance. Here, we established the antitumor efficacy of entinostat with chemotherapy in various preclinical cell and mouse models and found that HDAC3 inhibition was the primary mechanism of entinostat-induced suppression of PAX3:FOXO1 abundance. HDAC3 inhibition by entinostat decreased the activity of the chromatin remodeling enzyme SMARCA4, which, in turn, derepressed the microRNA miR-27a. This reexpression of miR-27a led to PAX3:FOXO1 mRNA destabilization and chemotherapy sensitization in aRMS cells in culture and in vivo. Furthermore, a phase 1 clinical trial (ADVL1513) has shown that entinostat is tolerable in children with relapsed or refractory solid tumors and is planned for phase 1B cohort expansion or phase 2 clinical trials. Together, these results implicate an HDAC3-SMARCA4-miR-27a-PAX3:FOXO1 circuit as a driver of chemoresistant aRMS and suggest that targeting this pathway with entinostat may be therapeutically effective in patients.