The bizarre parosteal osteochondromatous proliferation of the hand and foot is a benign lesion which occasionally may mimic osteochondromas, chondrosarcomas or osteosarcomas clinically, radiologically and histopathologically. This rare benign entity should be recognized in order to avoid unwarranted destructive therapy. The authors report a case of this disease and discuss the differential diagnosis and the relevant features of this disease entity. A 27-year-old female patient suffered from a painful swelling at the proximal middle phalanx of the right middle finger for five months. The lesion was excised but the residual lesion developed a distinct parosteal growth by radiologic studies one-and-a-half years later. The patient underwent reexcision of the lesion twice. No recurrence was noted 11 months following the last excision. Histopathologically, the first specimen contained bizarre chondrocytes. The recurrent nodular tumors, submitted in the second and third operations, were composed of cancellous bone with fatty marrow and a few marrow elements, and focally capped by cartilage. The adjacent soft tissue contained proliferating fibrous tissue. The osteochondral junctions in the latter two specimens were irregular. We believe that the documentation of this tumor at different stages of development has helped in the further understanding of this rare entity.