Dermoid cysts of the jaw are exceedingly rare, and only six such cases have been documented. The present paper reports a case with multiple microcysts showing histological characteristics of dermoid cyst in the surgically resected mandibular bone. These cysts were located near the inferior border of the mandibular bone, and histologically composed of an inner thin layer of squamous epithelium with marked hyperorthokeratinization and an outer layer of fibrous tissue containing numerous mature sebaceous glands. In addition, a hair follicle-like epithelial sphere was seen in part. The present microcysts suggest that it arises de novo, and one possible cause of jaw cysts could be sequestration of the stomadeal ectoderm that may have been trapped deep in the surface and embedded in the developing mandibular bone during embryogenesis. It may not be possible that such cysts developed from the odontogenic epithelial remnant undergoing dermoid metaplasia.