AbstractAn 83‐year‐old woman had developed an asymptomatic, yellowish, dome‐shaped skin tumor on her scalp which had enlarged for a period of 60 years to 10 times 10 times 10 mm in size. Histopathologically, the tumor consisted of undifferentiated basaloid cells, differentiated sebaceous cells and transitional cells. Although the basaloid cells resembled those of basal cell epithelioma (BCE), the tumor was distinct from BCE in the following points; existence of cystic spaces, no peripheral palisading, no proliferation of connective tissue stroma, and no tendency toward local invasion. Immunohistochemical studies using antikeratin monoclonal antibodies revealed that the tumor contained both the keratin types of BCE and of sebaceous glands. Electron microscopically, the tumor cells contained lipid droplets and keratohyaline granules in their cytoplasm. It is suggested that “sebaceous epithelioma” is a benign skin tumor which may be distinguished cytologically