The authors report the case of a 67-year-old woman with primary micro-invasive squamous cell carcinoma located in the lateral ventricle and originating from an epidermoid cyst. Radiological and histological features of the neoplasm are described and the relevant literature is studied briefly. Two consecutive surgical specimens were studied by light microscopy. In the histological sections of the subtotally removed material of the first operation, the cyst wall was layered by epithelium-the same as expected in an epidermoid cyst- and showed foci with mild to moderate dysplastic changes. Theses changes did not reach up to the degree of a carcinoma. However, because the cyst could not be resected totally, the possibility of a squamous cell carcinoma was considered in the differential diagnosis. In the present case, the diagnosis was firmly established in a second surgical specimen obtained ten months after the first operation. Now, the tumour proved to be a primary squamous cell carcinoma, which exhibited severe dysplastic changes. Primary squamous cell carcinoma of brain is extremely rare. To our knowledge, only 20 such tumours with pre-existing epidermoid cyst have been reported in the central nervous system. The intriguing observation in this case is a three year recurrence free survival following the subtotal removal of the malignant neoplasm at the second surgery, without postoperative radiotherapy.