We report an unusual generalized skeletal syndrome characterized by fibro-osseous lesions of the jawbones with a prominent psammomatoid body component, bone fragility, and bowing/sclerosis of tubular bones. The case fits with the emerging profile of a distinct syndrome with similarities to previously reported cases, some with an autosomal dominant inheritance and others sporadic. We suggest that the syndrome be named gnathodiaphyseal dysplasia. The patient had been diagnosed previously with polyostotic fibrous dysplasia (PFD) elsewhere, but further clinical evaluation, histopathological study, and mutation analysis excluded this diagnosis. In addition to providing a novel observation of an as yet poorly characterized syndrome, the case illustrates the need for stringent diagnostic criteria for FD. The jaw lesions showed fibro-osseous features with the histopathological characteristics of cemento-ossifying fibroma, psammomatoid variant. This case emphasizes that the boundaries between genuine GNAS1 mutation-positive FD and other fibro-osseous lesions occurring in the jawbones should be kept sharply defined, contrary to a prevailing tendency in the literature. A detailed pathological study revealed previously unreported features of cemento-ossifying fibroma, including the participation of myofibroblasts and the occurrence of psammomatoid bodies and aberrant mineralization, within the walls of blood vessels. Transplantation of stromal cells grown from the lesion into immunocompromised mice resulted in a close mimicry of the native lesion, including the sporadic formation of psammomatoid bodies, suggesting an intrinsic abnormality of bone-forming cells.