A 2-year-old intact female Australian Cattle Dog presented with a 1-cm diameter nonexudative dermal nodule on the medial aspect of the right thigh. Fine-needle aspiration revealed pyogranulomatous inflammation and many ovoid, 2-4 microm diameter, thin-capsulated, basophilic bodies that appeared to be fungal spores or yeast. Results of CBC, serum chemistry panel, lymph node palpation, and radiographs were unremarkable. Excisional biopsy and histopathology revealed pyogranulomatous folliculitis, furunculosis, and perifolliculitis. Rare fungal hyphae and spore forms were intimately associated with, and occasionally within, hair shafts. A morphologic diagnosis of dermatophytosis was made and Microsporum canis infection was confirmed by fungal culture. M canis is a common infectious agent found within the follicles and superficial keratin layers of canine skin. The kerion-type clinical presentation observed in the dog of this case is uncommonly observed with M canis. Additionally, the cytologic finding of multiple arthroconidia without hyphae is unusual. In the absence of hyphae, M canis arthroconidia may be confused with other fungal yeast bodies; therefore close scrutiny of a cytologic sample for arthroconidia associated with keratin, hair fragments, or hyphal structures is recommended.