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Embryonal rhabdomyosarcoma (ERMS) is a common pediatric malignancy of muscle, with relapse being the major clinical challenge. Self-renewing tumor-propagating cells (TPCs) drive cancer relapse and are confined to a molecularly definable subset of ERMS cells. To identify drugs that suppress ERMS self-renewal and induce differentiation of TPCs, a large-scale chemical screen was completed. Glycogen synthase kinase 3 (GSK3) inhibitors were identified as potent suppressors of ERMS growth through inhibiting proliferation and inducing terminal differentiation of TPCs into myosin-expressing cells. In support of GSK3 inhibitors functioning through activation of the canonical WNT/β-catenin pathway, recombinant WNT3A and stabilized β-catenin also enhanced terminal differentiation of human ERMS cells. Treatment of ERMS-bearing zebrafish with GSK3 inhibitors activated the WNT/β-catenin pathway, resulting in suppressed ERMS growth, depleted TPCs, and diminished self-renewal capacity in vivo. Activation of the canonical WNT/β-catenin pathway also significantly reduced self-renewal of human ERMS, indicating a conserved function for this pathway in modulating ERMS self-renewal. In total, we have identified an unconventional tumor suppressive role for the canonical WNT/β-catenin pathway in regulating self-renewal of ERMS and revealed therapeutic strategies to target differentiation of TPCs in ERMS.