Parosteal lipoma is an extremely rare benign tumor that is composed mainly of mature adipose tissue, and it has an intimate relationship to the underlying periosteal bone. We believe that only three cases have been previously reported that have described parosteal lipoma of the rib. Although parosteal lipoma is asymptomatic, motor and sensory function deficits have been reported that were caused by the tumor compressing the neuromuscular bundles in the proximal forearm and the sciatic nerve. We present here an exceedingly rare case of intercostal neuralgia caused by a parosteal lipoma of the rib.