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Fusion of the SS18 and either one of the SSX genes is a hallmark of human synovial sarcoma. The SS18 and SSX genes encode nuclear proteins that exhibit opposite transcriptional activities. The SS18 protein functions as a transcriptional coactivator and is associated with the SWI/SNF complex, whereas the SSX proteins function as transcriptional corepressors and are associated with the polycomb complex. The domains involved in these opposite transcriptional activities are retained in the SS18-SSX fusion proteins. Here, we set out to determine the direct transcriptional consequences of conditional SS18-SSX2 fusion protein expression using complementary DNA microarray-based profiling. By doing so, we identified several clusters of SS18-SSX2-responsive genes, including a group of genes involved in cholesterol synthesis, which is a general characteristic of malignancy. In addition, we identified a group of SS18-SSX2-responsive genes known to be specifically deregulated in primary synovial sarcomas, including IGF2 and CD44. Furthermore, we observed an uncoupling of EGR1, JUNB, and WNT signaling in response to SS18-SSX2 expression, suggesting that the SWI/SNF-associated coactivation functions of the SS18 moiety are impaired. Finally, we found that SS18-SSX2 expression affects histone modifications in the CD44 and IGF2 promoters and DNA methylation levels in the IGF2 imprinting control region. Together, we conclude that the SS18-SSX2 fusion protein may act as a so-called transcriptional "activator-repressor," which induces downstream target gene deregulation through epigenetic mechanisms. Our results may have implications for both the development and clinical management of synovial sarcomas.