A 4-day old neonate presented with a midline swelling located on the back of its head. The two most likely causes of the swelling were cephalohematoma, which is self-limiting and carries a benign prognosis, and encephalocele, often associated with central nervous system malformations. Evaluation with magnetic resonance imaging (MRI) revealed a subperiosteal blood collection with intact underlying structures, establishing the diagnosis of a cephalohematoma. This is the first report to show the value of MRI in distinguishing between an occipital cephalohematoma and an encephalocele.