Mature cystic teratoma is a common benign adnexal tumour in females. Malignant transformation in a mature cystic teratoma of the ovary is rare, occurring in only 1-2% of cases. The most common malignancy is squamous cell carcinoma, which consists of about 75% of malignant transformations. We describe a 43-year-old female with a 14cm right ovarian mature cystic teratoma with the rare finding of squamous cell carcinoma. The clinical evaluation was done with ultrasound, computed tomography (CT) scan and serologic marker serum CA125. Exploratory laparotomy was done to remove the mass. Right salpingo-oophorectomy was done. Moderately differentiated invasive squamous cell carcinoma arising in the background of mature cystic teratoma (dermoid cyst) was found. Further, she had total abdominal hysterectomy, left salpingo-oophorectomy and omentectomy, which were disease-free. She is kept on follow-up with ultrasound, CT scan and serum CA-125. Adequately staged patients with disease confined to the ovary have a much better prognosis with 5-year survival rates approaching 95%. Purpose of this case report was to create awareness among physicians while dealing with dermoid cysts of large sizes in older patients.