Recurrent fusion transcripts, which are one of the characteristic hallmarks of cancer, arise either from chromosomal rearrangements or from transcriptional errors in splicing. DNA rearrangements include intrachromosomal or interchromosomal translocation, tandem duplication, deletion, inversion, or result from chromothripsis, which causes complex rearrangements. In addition, fusion proteins can be created through transcriptional read-through. Fusion genes can be transcribed to fusion transcripts and translated to chimeric proteins, with many having demonstrated transforming activities through multiple mechanisms in cells. Fusion proteins represent novel therapeutic targets and diagnostic biomarkers of diagnosis, disease status, or progression. This review focuses on the mechanisms underlying the formation of oncogenic fusion genes and transcripts and their impact on the pathobiology of epithelial tumors.