We describe a unique case of a young man with concomitant Fragile X syndrome who presented with a dome-shaped pearly papule under the nose that had enlarged over 9 months. Histology demonstrated a smoothly contoured spindle cell neoplasm of the dermis with neuroid structures and foci of palisaded growth, consistent with a diagnosis of palisaded encapsulated neuroma (PEN). Palisaded encapsulated neuroma is a benign neural neoplasm of the skin or mucosa that displays histologic features of both a neurofibroma and a schwannoma. However, unlike these tumors, PEN lacks the implications for underlying systemic disease or malignancy. Palisaded encapsulated neuroma is a commonly underdiagnosed and misdiagnosed tumor that, once identified clinically and histologically, can be easily excised without recurrence.