Wnt signaling is down-regulated in embryonal rhabdomyosarcoma (ERMS) and contributes to the block of differentiation. Epigenetic mechanisms leading to its suppression are unknown and could pave the way towards novel therapeutic modalities. We demonstrate that EHMT2 suppresses canonical Wnt signaling by activating expression of the Wnt antagonist DKK1. Inhibition of EHMT2 expression or activity in human ERMS cell lines reduced DKK1 expression and elevated canonical Wnt signaling resulting in myogenic differentiation in vitro and in mouse xenograft models in vivo. Mechanistically, EHMT2 impacted Sp1 and p300 enrichment at the DKK1 promoter. The reduced tumor growth upon EHMT2 deficiency was reversed by recombinant DKK1 or LGK974, which also inhibits Wnt signaling. Consistently, among thirteen drugs targeting chromatin modifiers, EHMT2 inhibitors were highly effective in reducing ERMS cell viability. Our study demonstrates that ERMS cells are vulnerable to EHMT2 inhibitors and suggest that targeting the EHMT2-DKK1-β-catenin node holds promise for differentiation therapy.