Atypical marginal zone hyperplasia (AMZH) is a recently described disease entity seen mainly in children. AMZH most commonly affects tonsils and appendices. Cutaneous AMZH is rare. The authors report here a recurrent AMZH in the lip of a 9-year-old child who presented originally with a lip swelling for approximately 3 months. The lip lesion recurred after each incomplete excision for 4 times. Pathologically, the lesion demonstrated marginal zone B-cell hyperplasia with kappa monoclonality by flow cytometry and immunohistochemistry studies. Lymphoepithelial lesions were noted with involvement of minor salivary glands. Polymerase chain reaction for immunoglobulin heavy-chain gene rearrangement has been repeatedly negative. Polymerase chain reaction for Borrelia species DNA was negative on both paraffin-embedded tissue and plasma. Serum antibodies IgG and IgM for Helicobacter Pylori were positive. A diagnosis of AMZH was made. Two courses of anti H. Pylori therapy did not improve the lip lesion, which completely regressed after a course of prednisone therapy. With differential diagnosis of cutaneous marginal zone lymphoma, the case illustrated diagnostic challenges, especially with recurrent lesions. This is the first case of recurrent cutaneous AMZH that has uncharacteristic kappa light-chain restriction. AMZH should be considered in children with mucocutaneous lesions with features of marginal zone lymphoma.