Cancer gene fusions that encode a chimeric protein are often characterized by an intragenic discontinuity in the RNA\expression levels of the exons that are 5′ or 3′ to the fusion point in one or both of the fusion partners due to differences in the levels of activation of their respective promoters. Based on this, we developed an unbiased, genome-wide bioinformatic screen for gene fusions using Affymetrix Exon array expression data. Using a training set of 46 samples with different known gene fusions, we developed a data analysis pipeline, the “Fusion Score (FS) model”, to score and rank genes for intragenic changes in expression. In a separate discovery set of 41 tumor samples with possible unknown gene fusions, the FS model generated a list of 552 candidate genes. The transcription factor gene NCOA2 was one of the candidates identified in a mesenchymal chondrosarcoma. A novel HEY1-NCOA2 fusion was identified by 5′ RACE, representing an in-frame fusion of HEY1 exon 4 to NCOA2 exon 13. RT-PCR or FISH evidence of this HEY1-NCOA2 fusion was present in all additional mesenchymal chondrosarcomas tested with a definitive histologic diagnosis and adequate material for analysis (n = 9) but was absent in 15 samples of other subtypes of chondrosarcomas. We also identified a NUP107-LGR5 fusion in a dedifferentiated liposarcoma but analysis of 17 additional samples did not confirm it as a recurrent event in this sarcoma type. The novel HEY1-NCOA2 fusion appears to be the defining and diagnostic gene fusion in mesenchymal chondrosarcomas. © 2011 Wiley Periodicals, Inc.