Gastroblastoma is a rare distinctive biphasic tumor of the stomach. The molecular biology of gastroblastoma has not been studied, and no affirmative diagnostic markers have been developed. We retrieved two gastroblastomas from the consultation practices of the authors and performed transcriptome sequencing on formalin-fixed paraffin-embedded tissue. Recurrent predicted fusion genes were validated at genomic and RNA levels. The presence of the fusion gene was confirmed on two additional paraffin-embedded cases of gastroblastoma. Control cases of histologic mimics (biphasic synovial sarcoma, leiomyoma, leiomyosarcoma, desmoid-type fibromatosis, EWSR1-FLI1-positive Ewing sarcoma, Wilms' tumor, gastrointestinal stromal tumor, plexiform fibromyxoma, Sonic hedgehog-type medulloblastomas, and normal gastric mucosa and muscularis propria were also analyzed. The gastroblastomas affected two males and two females aged 9-56 years. Transcriptome sequencing identified recurrent somatic MALAT1-GLI1 fusion genes, which were predicted to retain the key domains of GLI1. The MALAT1-GLI1 fusion gene was validated by break-apart and dual-fusion FISH and RT-PCR. The additional two gastroblastomas were also positive for the MALAT1-GLI1 fusion gene. None of the other control cases harbored MALAT1-GLI1. Overexpression of GLI1 in the cases of gastroblastomas was confirmed at RNA and protein levels. Pathway analysis revealed activation of the Sonic hedgehog pathway in gastroblastoma and gene expression profiling showed that gastroblastomas grouped together and were most similar to Sonic hedgehog-type medulloblastomas. In summary, we have identified an oncogenic MALAT1-GLI1 fusion gene in all cases of gastroblastoma that may serve as a diagnostic biomarker. The fusion gene is predicted to encode a protein that includes the zinc finger domains of GLI1 and results in overexpression of GLI1 protein and activation of the Sonic hedgehog pathway.