Nevus sebaceous (NS) is a common congenital hamartoma of the skin, usually found on the head and neck. It may undergo malignant transformation to basal cell carcinoma (BCC). However the incidence and lifetime risk of malignant transformation is unknown. We performed an 18-year review of all NS excisions at our institution, to report the number of cases of BCC and other neoplasms within excised NS. The aim is to inform physicians who must weigh the risks in recommending excision of a NS in a pediatric patient population with the risk of malignancy. After a database query for years 1990-2008, charts were reviewed and data were extracted on demographics and surgical history relating to NS. Thirty-one NS with abnormal findings were reviewed microscopically by a dermatopathologist. There were 651 NS distinct lesions among 631 patients and 690 excisions. Twenty-one intralesional diagnoses were found in 18 patients. Five patients (0.8%) had BCC (mean age 12.5 yrs, range 9.7-17.4 yrs). Seven (1.1%) had syringocystadenoma papilliferum (SP) (mean age 8.8 yrs, range 1.7-16.9 yrs), a lesion that may undergo malignant transformation. Malignant transformation of NS can occur in childhood or adolescence. We believe all NS should be excised, however timing of excision can be flexible. Our data do not support age cutoffs or morphologic changes to determine optimal excision time. In conjunction with the treating physician, the parent and patient may weigh the small risk of malignant transformation of NS against the morbidity associated with excision and anesthesia.