This report highlights a rare case of a woman with horizontal ridging and tenderness of the right great toenail associated with dyspigmentation of 5 years' duration. Histopathology revealed a cystic structure with an epithelial lining mostly reminiscent of an isthmus-catagen cyst admixed with the presence of both an intermittent, focal granular layer and an eosinophilic cuticle surrounding pink, laminated keratin, most consistent with a diagnosis of subungual onycholemmal cyst (SOC). It is a rare and distinctive nail abnormality occurring in the dermis of the nail bed. We present a case of an SOC in the toenail mimicking subungual malignant melanoma, which may be an underrecognized and common entity that must be considered when discussing tumors of the nail unit, especially subungual melanoma.