Sebaceoma is a benign tumor composed of incompletely differentiated sebaceous cells of varying degrees of maturity. Sebaceomas was never reported as a known premalignant lesion.This is a report of a sixteen year old boy who presented with a malignant transformation of a recurrent sebaceoma which was excised twice by Moh's surgery. Excision was done with a free margin of 1 cm down to the parotid fascia. Reconstruction was performed on the same set by using cervicofascial flap extending down to the supra-clavicular area. The patient had an uneventful postoperative period apart from distal marginal necrosis of the flap, which healed nicely with conservative measures and daily dressing and was sent to our cancer centre to start his adjuvant radiotherapy.Previous literature stated that sebaceoma is a distinctive benign tumor. We have presented a case of an unusual malignant transformation of a preauricular recurrent sebaceoma. This indicates that sebaceoma does have a potential risk of malignant transformation. We believe that managing recurrent sebaceoma more aggressively with wide local excision and postoperative adjuvant radiotherapy would provide better prognosis.