Rhabdomyosarcoma (RMS), a common malignant tumor in children, presents numerous challenges in clinical treatment. This study investigated the specific functions and regulatory mechanisms of distal-less homeobox 5 (DLX5) in RMS. Data from TCGA, GEO and GEPIA databases were downloaded and analyzed. The effect of DLX5 and PAX3-FOXO1 on RMS cells was examined through cellular experiments. Binding activity between DLX5 and H3K9me2 was assessed using pull-down and chromatin immunoprecipitation-qPCR assays. Additionally, RMS model mice were constructed via xenotransplantation to validate the in vivo effects of DLX5 on RMS. The results revealed that DLX5 was upregulated in RMS tissues and increased in various RMS cell lines, particularly in alveolar RMS cell lines. DLX5 knockdown inhibited malignant biological behaviors. Besides, DLX5 expression was associated with myogenic differentiation of RMS cells. While the overexpression or knockdown of DLX5 did not affect PAX-FOXO1 expression. PAX3-FOXO1 knockdown reduced DLX5 expression, indicating that DLX5 act as a downstream effector of PAX3-FOXO1. Mechanistically, PAX3-FOXO1 regulated DLX5 expression through KDM4B/H3K9me2 axis. In vitro experiments further demonstrated that knockout of DLX5 or KDM4B inhibited tumor growth. In conclusion, DLX5 expression was increased in PAX3-FOXO1-driven RMS, and its knockdown inhibited malignant biological behaviors of RMS cells. Moreover, the aberrant expression of DLX5 in PAX3-FOXO1-driven RMS was regulated by KDM4B/H3K9me2 axis. These findings provided potential therapeutic targets for RMS treatment.