The proliferating trichilemmal cyst is a rare, usually benign tumor of external root sheath origin. About 90% of the cases gccur on the scalp, with the residual 10% occurring mainly on the back. More than 80% of the patients are women, most of whom are elderly. The cysts are commonly large, measuring up to 6 cm or more in diameter. A 33-year-old woman visited our department with a history of a matchhead- sized erythematous tender papule on her left knee that had been present for two years. A histopathological examination revealed a well-circumscribed, multilobulated cystic tumor with trichilemmal keratinization in the dermis. There were individual cell keratinization and focal calcification in some areas. This case was diagnosed as a proliferating trichilemmal cyst. This case was very unusual not only because the tumor occurred on the knee as a matchhead-sized papule but also because of her young age at presentation.