Simple Summary: Fusion proteins are an important class of oncogenes in sarcoma. Approximately 40 percent of all sarcoma entities are driven by one of the more than 100 known fusion proteins. Individual fusion proteins belong to different protein classes, including transcription factors, epigenetic regulators and kinases, and are characterized by specific mechanisms of action. Here, we summarize the current knowledge on fusion oncogenes in sarcoma, highlighting the differences as well as similarities in their biology. Overall, this work provides the basis for a functional classification of sarcomas. Sarcomas comprise a heterogeneous group of malignant tumors of mesenchymal origin. More than 80 entities are associated with different mesenchymal lineages. Sarcomas with fibroblastic, muscle, bone, vascular, adipocytic, and other characteristics are distinguished. Nearly half of all entities contain specific chromosomal translocations that give rise to fusion proteins. These are mostly pathognomonic, and their detection by various molecular techniques supports histopathologic classification. Moreover, the fusion proteins act as oncogenic drivers, and their blockade represents a promising therapeutic approach. This review summarizes the current knowledge on fusion proteins in sarcoma. We categorize the different fusion proteins into functional classes, including kinases, epigenetic regulators, and transcription factors, and describe their mechanisms of action. Interestingly, while fusion proteins acting as transcription factors are found in all mesenchymal lineages, the others have a more restricted pattern. Most kinase-driven sarcomas belong to the fibroblastic/myofibroblastic lineage. Fusion proteins with an epigenetic function are mainly associated with sarcomas of unclear differentiation, suggesting that epigenetic dysregulation leads to a major change in cell identity. Comparison of mechanisms of action reveals recurrent functional modes, including antagonism of Polycomb activity by fusion proteins with epigenetic activity and recruitment of histone acetyltransferases by fusion transcription factors of the myogenic lineage. Finally, based on their biology, we describe potential approaches to block the activity of fusion proteins for therapeutic intervention. Overall, our work highlights differences as well as similarities in the biology of fusion proteins from different sarcomas and provides the basis for a functional classification. [ABSTRACT FROM AUTHOR]