Epidermal cysts are commonly encountered in surgical practice. Malignant degeneration of epidermal sebaceous cyst is uncommon. The authors report the case of a 38-year Filipino woman presenting with a voluminous sebaceous cyst of the left buttock. Ultrasonography and computer tomography were made preoperatively without any hint of eventual malignant degeneration. Marginal excision was performed with direct closure of the skin. The histological examination revealed epidermal sebaceous cyst with squamous cell carcinoma in situ, which is a quite rare, but well known complication occurring in sebaceous cysts.