THE AUTHORS REPORT a case of lipofibromatous hamartoma of the median nerve in a patient who presented with symptoms of carpal tunnel syndrome. The diagnosis was made by magnetic resonance imaging and confirmed by intraoperative findings and histological diagnosis; distinctive magnetic resonance imaging features of this entity are described. In this patient, surgery was limited to biopsy to confirm the diagnosis and external neural decompression, which helped to stop the progression of the symptoms. In their review of the literature, the authors found four types of lipomatous masses in the extremities affecting the function of peripheral nerves, commonly the median nerve. Treatment and the extent of surgery differ for each patient, based on the anatomical findings and extent of neurological deficit. The etiology, pathogenesis, differential diagnosis, and surgical management of lipofibromatous hamartoma are described.