Dermal-based combined squamous and melanocytic neoplasms are emerging clinicopathologic entities that tend to appear on sun-exposed areas of elderly patients. The biologic behavior of such cutaneous neoplasms remains uncertain because of their rarity. Histopathologic differential includes the following diagnostic entities: (1) dermal squamomelanocytic tumor, (2) melanocytic matricoma, and (3) rare histologic variant of pilomatrical carcinoma, the so-called pilomatrical carcinoma with intralesional melanocytes. Herein, we present a novel case of locally invasive dermal squamomelanocytic tumor. A 72-year-old man presented with a pigmented papule on nasal ala that was clinically concerning for basal cell carcinoma. Histopathologic evaluation demonstrated atypical melanocytic cells architecturally and intimately intermixed with single units and clusters of atypical squamous cells. Most notable feature of this case is focal matrical differentiation and locally invasive tumor growth, characterized by multifocal perineural invasion.