Synovial sarcoma (SS) is driven by a unique t(18;X) chromosomal translocation resulting in expression of the SS18-SSX fusion oncoprotein, a transcriptional regulator with both activating and repressing functions. However, the manner in which SS18-SSX contributes to the development of SS is not entirely known. Here, we show that SS18-SSX drives the expression of Preferentially Expressed Antigen in Melanoma (PRAME), which is highly expressed in SS but whose function remains poorly understood. The fusion protein directly binds and activates the PRAME promoter and we found that expression of SS18-SSX and PRAME are positively correlated. We provide evidence that PRAME modulates retinoic acid (RA) signaling, forming a ternary complex with the RA receptor α (RARα) and the Enhancer of Zeste Homolog 2 (EZH2). Knockdown of PRAME suppressed the response to all-trans retinoic acid (ATRA) supporting PRAME’s role in modulating RA-signaling. Notably, we demonstrate that combined pharmacological inhibition of EZH2 and treatment with ATRA reconstituted RA signaling followed by reduced proliferation and induction of cellular senescence. In conclusion, our data provides new insights on the role of the SS18-SSX fusion protein in regulation of PRAME expression and RA signaling, highlighting the therapeutic potential of disrupting the RARα-PRAME-EZH2 complex in SS. (Figure presented.)