Intraosseous lipoma is a benign tumor that originates from proliferating mature lipocytes. It often occurs in the metaphysis of long bones of the lower extremity, and also in the calcaneus, humerus, mandible, sacrum, and rib bones. Frequently, it involutes spontaneously through a process of infarction, calcification, and cyst formation. It can either present as pain, or be asymptomatic and only discovered through an incidental radiological finding. In our case, the patient presented with heel pain. Intraoperatively, it was found that the intraosseous cavity was filled with fat along with an adjacent but separate area of cystic degeneration. There was also a cortical perforation at the cystic lesion which was communicating with the subtalar joint. This cortical breach is most likely the cause of diffuse lateral heel pain experienced by our patient, and such a pathological fracture due to intraosseous lipoma has never been reported.