Rhabdomyosarcoma (RMS) is a pediatric soft tissue sarcoma that histologically resembles embryonic skeletal muscle. RMS occurs throughout the body and an exclusively myogenic origin does not account for RMS occurring in sites devoid of skeletal muscle. We previously described an RMS model activating a conditional constitutively active Smoothened mutant (SmoM2) with aP2-Cre. Using genetic fate mapping, we show SmoM2 expression in Cre-expressing endothelial progenitors results in myogenic transdifferentiation and RMS. We show that endothelium and skeletal muscle within the head and neck arise from Kdr-expressing progenitors, and that hedgehog pathway activation results in aberrant expression of myogenic specification factors as a potential mechanism driving RMS genesis. These findings suggest that RMS can originate from aberrant development of non-myogenic cells.