Prohibitin 2 (PHB2), as a conserved multifunctional protein, is traditionally localized in the mitochondrial inner membrane and essential for maintenance of mitochondrial function. Here, we investigated the role of PHB2 in human rhabdomyosarcoma (RMS) RD cells and found substantial localization of PHB2 in the nucleolus. We demonstrated that PHB2 knockdown inhibited RD cell proliferation through inducing cell cycle arrest and suppressing DNA synthesis. Meanwhile, down-regulation of PHB2 also induced apoptosis and promoted differentiation in fractions of RD cells. In addition, PHB2 silencing led to altered nucleolar morphology, as observed by transmission electron microscopy, and impaired nucleolar function, as evidenced by down-regulation of 45S and 18S ribosomal RNA synthesis. Consistently, upon PHB2 knockdown, occupancy of c-Myc at the ribosomal DNA (rDNA) promoter was attenuated, while more myoblast determination protein 1 (MyoD) molecules bound to the rDNA promoter. In conclusion, our findings suggest that nucleolar PHB2 is involved in maintaining nucleolar morphology and function in RD cells by regulating a variety of transcription factors, which is likely to be one of the underlying mechanisms by which PHB2 promotes tumor proliferation and represses differentiation. Our study provides new insight into the pathogenesis of RMS and novel characterizations of the highly conserved PHB2 protein.