Iliotibial band (ITB) friction syndrome is a common overuse injury typically seen in the active athlete population. A nodular lesion on the inner side of the ITB as an etiology or an accompanying lesion from friction syndrome has been rarely reported. A 45-year-old male presented with recurrent pain and a movable nodule at the lateral joint area, diagnosed as ITB friction syndrome. The nodule was confirmed as a rare intra-articular fibroma of the tendon sheath (FTS) on the basis of histopathologic findings. We describe the MRI findings, arthroscopic and pathologic features, in this case of intra-articular FTS presenting with ITB friction syndrome.