Chronic expanding hematoma (CEH), which is defined as persistent hematoma manifesting as enlarging space-occupying mass, rarely occurs in the retroperitoneal space. Here, we report a case of retroperitoneal CEH with xanthogranulama. A 72-year-old man with a history of genuine polycythemia was admitted for idiopathic renal subcapsular hematoma 3 years ago. Regular follow-up imaging revealed that the hematoma was gradually expanding in the left retroperitoneal space with the capsules invading psoas muscles. Given the possibility that the mass was a neoplastic intratumoral hemorrhage, we resected the mass. Complete removal of the capsule was impossible due to severe adhesion and its extension in his psoas muscles. Moreover, postoperative bleeding from psoas muscles occurred and emergency exploration to control the bleeding was required. Microscopic findings showed that the hematoma capsule consisted of collagenous tissue with chronic inflammatory infiltrate and foreign-body granuloma with foam cells and giant cells. The final diagnosis was CEH with xanthogranuloma. Our case suggests that early resection for retroperitoneal CEH may be desirable to avoid severe adhesion and invasion around the capsule.