Establishing the best diagnosis for musculoskeletal neoplasms requires a multidisciplinary approach using clinical, radiographic, and histologic analyses. Despite this rigorous approach, establishing accurate diagnoses and prognoses remains challenging. Improved diagnostic methods are expected as unique molecular signals for specific bone and soft tissue cancers are identified. We performed a systematic review of the best available evidence to explore three major applications of molecular genetics that will best benefit clinical management of musculoskeletal neoplasms: diagnostic, prognostic, and therapeutic applications. The specific questions addressed in this systematic review are: (1) What sets of histopathologic sarcoma subtypes will benefit from molecular evaluation and diagnosis? (2) What molecular methods are best applied to histopathologic sarcomas to distinguish between major subtypes? (3) How do the molecular patterns discovered on genetic diagnosis affect prognosis of certain sarcomas? (4) Which sarcoma translocations can benefit from an improved response and outcome using existing and forthcoming pharmacogenetic approaches targeting molecular events? This review summarizes recent advances in molecular genetics that are available and will soon be available to clinicians to better predict outcomes and subsequently help make future treatment decisions. Level of Evidence: Level IV, diagnostic study. See the Guidelines for Authors for a complete description of levels of evidence.