Psammomatoid ossifying fibroma (PsOF), also known as juvenile PsOF, is a benign fibro-osseous neoplasm predominantly affecting the extragnathic bones, particularly the frontal and ethmoid bones, with a preference for adolescents and young adults. The clinical and morphologic features of PsOF may overlap with those of other fibro-osseous lesions, and additional molecular markers would help increase diagnostic accuracy. Because identical chromosomal breakpoints at bands Xq26 and 2q33 have been described in 3 cases of PsOF located in the orbita, we aimed to identify the exact genes involved in these chromosomal breakpoints and determine their frequency in PsOF using transcriptome sequencing and fluorescence in situ hybridization (FISH). We performed whole RNA transcriptome sequencing on frozen tissue in 2 PsOF index cases and identified a fusion transcript involving SATB2, located on chromosome 2q33.1, and AL513487.1, located on chromosome Xq26, in one of the cases. The fusion was validated using reverse transcription (RT)-PCR and SATB2 FISH. The fusion lead to a truncated protein product losing most of the functional domains. Subsequently, we analyzed an additional 24 juvenile PsOFs, 8 juvenile trabecular ossifying fibromas (JTOFs), and 11 cemento-ossifying fibromas (COFs) for SATB2 using FISH and found evidence of SATB2 gene rearrangements in 58% (7 of 12) of the evaluable PsOF cases but not in any of the evaluable JTOF (n = 7) and COF (n = 7) cases. A combination of SATB2 immunofluorescence and a 2-color SATB2 FISH in our index case revealed that most tumor cells harboring the rearrangement lacked SATB2 expression. Using immunohistochemistry, 65% of PsOF, 100% of JTOF, and 100% of COF cases showed moderate or strong staining for SATB2. In these cases, we observed a mosaic pattern of expression with >25% of the spindle cells in between the bone matrix, with osteoblasts and osteocytes being positive for SATB2. Interestingly, 35% (8 of 23) of PsOFs, in contrast to JTOFs and COFs, showed SATB2 expression in <5% of cells. To our knowledge, this is the first report that shows the involvement of SATB2 in the development of a neoplastic lesion. In this study, we have showed that SATB2 rearrangement is a recurrent molecular alteration that appears to be highly specific for PsOF. Our findings support that PsOF is not only morphologically and clinically but also genetically distinct from JTOF and COF.