Fibroepithelioma of Pinkus (FEP) is a rare, indolent variant of basal cell carcinoma (BCC) with a unique anastomosing type of epidermal hyperplasia. Certain benign and neoplastic conditions including BCC are known to develop in a setting of chronic lymphedema. We report for the 1st time the histological spectrum of evolution of a large exophytic multinodular FEP, bearing a single initiating focus of BCC, in preexisting chronic lymphedema of the lower limb. The lesion possibly evolved from long-standing local immune suppression, and clinically resembled a high-grade carcinoma. Oozing lymphatic fluid may interfere with the success of skin grafting following wide local excision in a lymphedematous limb, thus offering a challenging scenario from the management point of view.