FNA smears from five histologically confirmed cases of pilomatrixoma were reviewed to delineate the cytological features helpful in diagnosis. A combination of basaloid cells, ghost cells and foreign body giant cells appeared to be necessary in FNA smear for a confident cytodiagnosis of pilomatrixoma. Presence of naked nuclei, nucleated squamous cells and calcification were additional features in favour of the diagnosis. Another 10 cases with initial cytodiagnosis of pilomatrixoma or benign skin appendage tumour were reviewed. Using the above criteria, diagnosis of pilomatrixoma was easy in five cases. One case was problematical due to presence of atypical squamous cells. Initially the cytological features were most commonly confused with epidermal inclusion cyst, giant cell lesion or a squamous cell carcinoma. The main reasons for erroneous diagnosis were lack of awareness of cytological features, predominance of one component over the others, and non‐representative FNA smears. Atypia in nucleated squamous cells, and misinterpretation of basaloid cells as malignant can lead to diagnostic dilemma. Adequate clinical data are also necessar