Cholesterol granuloma of the breast is a rare benign condition that can be mistaken for breast cancer. We present a case of a 42-year-old woman who presented with a 1-year history of asymptomatic palpable nodule in the upper external quadrant of the right breast. Mammography and ultrasonography suggested carcinoma, but excisional biopsy revealed cholesterol granuloma with unusual osseous metaplasia. Although reported to occur more frequently in the middle ear and mastoid process, we believe that better awareness of this rare benign condition is most important to avoid misdiagnosis and unnecessary surgery.