A polypoid fibro-osseous nodule arising from the soft tissues of a toe of a 17 yr old man is described. Initial partial excision of the nodule led to a wrong diagnosis of pyogenic granuloma. The mistaken diagnosis was based on finding an extensively ulcerated polypoid nodule with a core of fibrovascular tissue which resembled granulation tissue. The fast growing lesion recurred twice within 4 mths following incomplete excisions. Bony destruction of the distal phalanx was noted radiologically at the second recurrence. The rare lesion is an example of fibro-osseous pseudotumor of the digits, sometimes described as pseudomalignant osseous tumor of the soft tissues. It is curable by complete local resection. The importance of recognizing this lesion lies in its potential to be confused with parosteal or extraskeletal osteosarcoma. The fast growth rate of present case led to a strong clinical suspicion of malignancy. Incomplete excisions resulted in local recurrences rendering more extensive surgery necessary. There was no further recurrence 12 mths after the last excision.