Rhabdoid tumors (RT) are aggressive tumors characterized by genetic loss of SMARCB1 (SNF5, INI-1), a component of the SWI/SNF chromatin remodeling complex. No effective treatment is currently available. This study seeks to shed light on the SMARCB1-mediated pathogenesis of RT and to discover potential therapeutic targets. Global gene expression of 10 RT was compared with 12 cellular mesoblastic nephromas, 16 clear cell sarcomas of the kidney, and 15 Wilms tumors. In all, 114 top genes were differentially expressed in RT (P<0.001, fold change >2 or <0.5). Among these were downregulation of SMARCB1 and genes previously associated with SMARCB1 (ATP1B1, PTN, DOCK4, NQO1, PLOD1, PTP4A2, PTPRK); 28/114 top differentially expressed genes were involved with neural or neural crest development and were all sharply downregulated. This was confirmed by Gene Set Enrichment Analysis (GSEA). Neural and neural crest stem cell marker proteins SOX10, ID3, CD133, and Musashi were negative by immunohistochemistry, whereas Nestin was positive. Decreased expression of CDKN1A, CDKN1B, CDKN1C, CDKN2A, and CCND1 was identified, while MYC-C was upregulated. GSEA of independent gene sets associated with bivalent histone modification and polycomb group targets in embryonic stem cells showed significant negative enrichment in RT. Several differentially expressed genes were associated with tumor suppression, invasion, and metastasis, including SPP1 (osteopontin), COL18A1 (endostatin), PTPRK, and DOCK4. We conclude that RTs arise within early progenitor cells during a critical developmental window in which loss of SMARCB1 directly results in repression of neural development, loss of cyclin-dependent kinase inhibition, and trithorax/polycomb dysregulation.