A 70-year-old Japanese timberworker dealing with imported timber from the U.S.A. and Russia had an asymptomatic subcutaneous nodule with a small fistula on his left knee. Histopathological examination of the nodule revealed brownish hyphal elements in encapsulated pyogranuloma. The fungus isolated from a discharge of the fistula and an excised specimen of the lesion was identified as Geniculosporium sp., which represents a conidial state (anamorph) of several genera such as Anthostomella, Biscogniauxia, Euepixylon, Leprieuria, Nemania, Phylacia and Rosellina in the Xylariaceae. Whereas this dematiaceous hyphomycete is commonly found on decaying wood and bark of various trees, to our knowledge, this is the first case of a phaeomycotic cyst caused by fungi belonging to the genus Geniculosporium.