Rhabdomyosarcoma, the most common pediatric sarcoma, has no effective treatment for the pleomorphic subtype. Still, what triggers transformation into this aggressive phenotype remains poorly understood. Here we used Ptch1 /ETV7 mice with enhanced incidence of rhabdomyosarcoma to generate a model of pleomorphic rhabdomyosarcoma driven by haploinsufficiency of the lysosomal sialidase neuraminidase 1. These tumors share mostly features of embryonal and some of alveolar rhabdomyosarcoma. Mechanistically, we show that the transforming pathway is increased lysosomal exocytosis downstream of reduced neuraminidase 1, exemplified by the redistribution of the lysosomal associated membrane protein 1 at the plasma membrane of tumor and stromal cells. Here we exploit this unique feature for single cell analysis and define heterogeneous populations of exocytic, only partially differentiated cells that force tumors to pleomorphism and promote a fibrotic microenvironment. These data together with the identification of an adipogenic signature shared by human rhabdomyosarcoma, and likely fueling the tumor's metabolism, make this model of pleomorphic rhabdomyosarcoma ideal for diagnostic and therapeutic studies.