Many melanocytic nevi contain areas similar to nerve sheath tumors (NST) and NSTs with melanin have been described. There are some NSTs with at least partial intraneural location, including neurofibromas, plexiform neurofibromas, granular cell tumors and the recently described, dendritic cell neurofibroma with pseudorosettes. We describe the case of an NST with melanocytic differentiation and intraneural location, for which we suggest the term 'melanocytoneuroma' (MCN). It arose in the skin of a 67-year-old woman with no previous history of melanoma or neurofibromatosis. The lesion presented as a papule and histologically consisted of a dermal nodule without junctional melanocytic activity. The lesion comprised an intraneural proliferation of large epithelioid eosinophilic cells with prominent cell borders imparting a 'plant-like' appearance. The cells were also seen within adjacent nerve twigs and were positive for S100, Melan-A, HMB-45, microphthalmia transcription factor and PGP 9.5. The lesion was entirely surrounded by an epithelial membrane antigen-positive-perineurial coat and the individual tumor cells were invested by laminin and collagen type-IV-positive basal lamina-like material. The lesion did not show any evidence of atypia and following complete excision, no recurrence has been documented. In conclusion, this unusual lesion represents an intraneural proliferation with melanocytic and nerve sheath cell differentiation, to which we have accorded the appellation, MCN.