The clinical and pathologic features of 25 cases of phaeomycotic cyst, collected at the Armed Forces Institute of Pathology between 1959 and 1978, are described. Phaeomycotic cyst is infection of the deep dermis and subcutaneous tissue by dematiaceous (brown) fungi. Species of Phialophora were most frequently isolated from these lesions. Synonyms for phaeomycotic cyst are—among others—phaeomycosis and phaeosporotrichosis. Phaeohyphomycosis includes phaeomycotic cyst and some other mycoses. The term “phaeo” is derived from the Greek φαιός, meaning grey or black, and refers to the brown color in vivo and in vitro of these fungi. Phialophora species are world-wide saprophytes, common in soil, decaying wood, and vegetation. They have low virulence and low pathogenicity, and are inoculated along with slivers whose retention is probably an important causal factor in establishing infection. Proliferation of the fungi provokes a mixed suppurative and granulomatous reaction which remains localized. Early the characteristic histopathologic picture is one of multiple stellate abscesses. These progress to a single circumscribed lesion with a central cavity filled with pus and surrounded by a fibrous wall. There are no systemic signs or symptoms, regional lymph nodes are not involved, nor has any patient had systemic spread. The infection is rare but tends to be more common in warm climates. No race, sex, or age group is predisposed, but patients with immune deficiency or debilitating disease are at increased risk. In older publications phaeomycotic cysts have been described as variants of chromomycosis, sporotrichosis, and mycetoma. Phaeomycotic cysts, however, do not provoke hyperplasia of the epidermis or ulceration—characteristic features of both chromomycosis and sporotrichosis, nor do phaeomycotic cysts form sinus tracts or contain grains—both typical features of mycetoma. The strictly localized abscess or “cyst” is the characteristic feature of phaeomycotic cysts.