We report four cases of an unusual cutaneous squamo-melanocytic neoplasm with histological features of malignancy and uncertain biological potential. These tumors developed on the face of middle-aged and older adults. Clinically, a purple-black nodule ranged in size from 3 to 10 mm in maximum diameter. After complete excision, neither recurrence nor metastasis has been observed (mean follow-up time, 3.25 years). Histologically, a discrete dermal nodule surrounded by a fibroblastic stroma was composed of large islands of mitotically active atypical epithelioid cells. The nodule was not connected to the epidermis in three of four cases. Two types of cells were either diffusely admixed or clustered in small groups within the nodule. Small, atypical, epithelioid cells containing finely granular brown pigment, proven to be melanin, constituted the first cell type. The second type consisted of atypical squamoid cells, some with abundant pink cytoplasm, giving rise to squamous pearls. A lentigo maligna was present in one case. The remaining three cases had neither significant intraepidermal melanocytic nor keratinocytic atypia. Immunohistochemical studies indicated that the melanin-containing epithelioid cells expressed S-100 antigens, and the squamoid cells expressed cytokeratins. A small population of tumor cells did not label with either of the antibodies. These four tumors (along with a previously reported, apparently identical tumor arising in the setting of lentigo maligna) represent a unique biphasic dermal neoplasm with histological features of malignancy but, at this time, uncertain biological behavior. Although none have recurred or metastasized, the follow-up time is too short in our estimation to guarantee a benign course. These neoplasms are easily recognized by their characteristic features. Further follow-up evaluations should allow determination of their biologic potential.