A rare case of subcutaneous granuloma annulare of the eyelid is reported. A diabetic patient developed a unilateral periorbital tumorous mass. Biopsy revealed subcutaneous palisading granuloma. By microscopy and immunohistology, other granulomatous reactions including necrobiosis lipoidica could be ruled out. Since treatment with dapsone was without effect, the tumor was surgically excised. The differential diagnosis and the literature are briefly discussed.