The aim of the present work was to improve the understanding of the impact of malignancy grade and myogenic/rhabdomyoblastic differentiation on the natural course of retroperitoneal liposarcoma. All consecutive patients affected by primary well-differentiated (WD)/dedifferentiated (DD) retroperitoneal liposarcoma, surgically treated at our institution between January 2002 and December 2011, were retrospectively evaluated. Tumors were stained for mdm2 and 5 myogenic markers (smooth muscle actin-α, h-caldesmon, calponin, desmin, myogenin). The French National Federation of the Centers for the Fight Against Cancer (FNCLCC) grading system was applied. Overall survival, crude cumulative incidence of local recurrence, and distant metastases were calculated. Multivariable analyses were carried out. A total of 144 patients were identified. Median follow-up was 68 months (interquartile range: 46 to 104 mo). Fifty-two patients were affected by WD/G1 and 92 by DD liposarcoma. Among the latter, 60 were grade G2 and 32 G3. Myogenic differentiation was present in 54 cases (8/52 WD/G1, 27/60 DD/G2, 18/32 DD/G3). Seven cases had a rhabdomyoblastic DD component (1/60 DD/G2 and 6/32 DD/G3). Five-year overall survival rates were 93%, 57%, and 21% for WD/G1 liposarcoma, G2 DD, and G3 DD liposarcoma, respectively, and 75%, 42%, and 29% for liposarcoma without myogenic differentiation, with myogenic differentiation, with rhabdomyoblastic differentiation, respectively (P<0.001). Of note, 5/6 patients affected by G3 DD liposarcoma with a rhabdomyoblastic component died within 8 months. FNCLCC grade and myogenic differentiation significantly predicted the outcome of retroperitoneal liposarcoma. These should be factored into treatment decision-making and possibly used to stratify patients in clinical trials.