Dedifferentiated liposarcoma is a malignant adipocytic neoplasm containing a nonlipogenic sarcoma of variable histological grade that arises against the background of a pre-existing well-differentiated liposarcoma. The phenomenon of dedifferentiation is considered to be time-dependent, but the mechanism is not well known. The retinoblastoma protein, encoded by the RB1 gene located at 13q14, is a key regulator of proliferation, development, and differentiation of certain cell types, including adipocytes. In the current study, we investigated the genetic alterations of the RB1 gene, such as mutation (the essential promoter region and the protein-binding pocket domain; exons 20–24) and methylation of the promoter region, in addition to pRB expression and loss of heterozygosity (LOH) status, in two morphologically distinct areas (nonlipogenic dedifferentiated and well-differentiated components) in 27 patients. As a control, 11 undifferentiated high-grade pleomorphic sarcoma/pleomorphic malignant fibrous histiocytoma samples and 11 well-differentiated liposarcoma samples were also evaluated. Dedifferentiated components showed LOH (15/25; 60%) and abnormal retinoblastoma protein expression (18/27; 66.7%) more frequently than noted in the well-differentiated components (3/24; 12.5% and 9/27; 33.3%, respectively). Five and four out of the 27 dedifferentiated components harbored mutations and promoter methylation, respectively, whereas none of these alterations were seen in the well-differentiated components. These results suggest that retinoblastoma protein has a major role to play in dedifferentiation and that a ‘two-hit’ mechanism is involved in the altered retinoblastoma protein expression in dedifferentiated liposarcoma.