Inverted papilloma of the urinary tract is a rare benign lesion. We report, to our knowledge, the first case of high-grade ureteral obstruction caused by an inverted papilloma with coexistent carcinomatous elements. Our patient was referred for evaluation of painless, gross hematuria. Imaging studies demonstrated a left proximal ureteral filling defect causing severe left-sided hydroureteronephrosis. Ureteroscopy demonstrated a 1-cm papillary lesion on the medial aspect of the proximal ureteral wall. Pathologic examination documented a lesion with elements of inverted papilloma and a small focus of well-differentiated transitional cell carcinoma. We discuss the management and significance of this rare urothelial lesion.