Meralgia paresthetica (MP) consists of pain or dysthesia in the lateral thigh caused by entrapment of the lateral femoral cutaneous nerve (LFCN) underneath the inguinal ligament. The causes include iliac crest bone graft harvesting, seat belt injury associated with motor vehicle accident, diabetes mellitus, and trauma. The authors present the case of a 50-year-old woman who had a 1-year history of right-sided MP. The patient's history and the results of physical and radiological examinations were otherwise unremarkable except for the finding of a lipoma over the surface of the right sartorius muscle. Electrophysiological studies were interpreted as demonstrating peripheral neuropathy only. Conservative treatment, including heat or ice packing and local anesthetic and steroid injections, failed to control the patient's symptoms. Although sectioning or neurolysis of the LFCN appears to offer good-to-excellent results, the patient underwent excision of the lipoma. The symptoms resolved completely. To the best of the authors' knowledge this is the first case of MP associated with compression caused by a lipoma. The authors conclude that lipoma compression can cause MP, and in such cases, total excision of the lipoma may resolve the condition.