Chondroid lipoma is a rare variant of lipoma and often confused with chondroid tumours such as soft tissue chondroma, extraskeletal chondrosarcoma and myxoid chondrosarcoma. It consists of two components - adipose tissue and cartilaginous tissue. Differentiating chondroid lipoma from its malignant variant such as extraskeletal chondrosarcoma and myxoid chondrosarcoma is necessary as the treatment modality is more intense and aggressive for latter. Here we are presenting histopathological features and differential diagnosis in an unusual case of chondroid lipoma in a 40-year-old female.