A 70-year old man presented with postprandial upper abdominal pain of two months duration, accompanied by indigestion, weight loss, and anorexia. There was no abnormality noted in the lab results. Abdominal CT showed a 3-cm round cystic mass in the tail of the pancreas. A distal pancreatectomy was done. The patient was discharged in 9 days. The cystic wall was composed of a keratinizing squamous epithelium surrounded by subepithelial, dense lymphoid tissue. Some clusters of the sebaceous gland were noted but there was no sweat gland or hair follicle. These findings were consistent with a lymphoepiethelial cyst with sebaceous differentiation. The patient was followed up for 12 months post operatively, and no recurrence was noted.