We herein report an 18-month-old girl who presented with a retroperitoneal mature teratoma that later developed into an endodermal sinus tumor. Her symptoms included an expanding abdominal girth. The serum levels of alpha-fetoprotein were moderately elevated. The excised specimen was a benign mature cystic retroperitoneal teratoma measuring 18 x 11 x 8 cm in size. A hemorrhagic focus measuring 4 cm in diameter was present, which proved to be the focus of an endodermal sinus tumor histologically. The retroperitoneal mature teratoma observed in this case showed malignant germ-cell differentiation. The above case is thought to be extremely rare, but these findings also suggest the possibility of a mature teratoma presenting as a premalignant condition. The sequence of "mature teratoma--germ-cell malignancy" is thus considered to represent a new potential pattern of early phase of carcinogenesis in teratomas.