Cryptococcal meningitis is recognized as one of the AIDS defining conditions. It acts as a diagnostic marker for further investigations to establish the retroviral infection. Cryptococcus neoformans can be readily identified by its characteristic capsulated morphology. But rarely variations in morphology may be seen. We report a case of chronic meningitis in an AIDS patient whose cerebrospinal fluid (CSF) stained with India ink showed elliptical, peanut shaped and pseudomycelial large yeast cells with thick capsules. The organism was cultured and identified as Cryptococcus neoformans var neoformans. Unusual morphological forms may create diagnostic dilemma in the rapid diagnosis of cryptococcal meningitis.