A 53-year old man presented with seven months history of progressive weakness of extension of the digits and the thumb of the left hand. The wrist extension was normal and sensations were also intact. The patient had also been noticing a progressively enlarging lump on the lower anterolateral aspect of the left antecubital fossa for the last three months. Physical examination andelectro diagnostic studies revealed motor deficit along the posterior interosseous nerve (PIN) distribution with preservation of sensations. Also a soft tissue solitary lump (measuring 6×5 cm in its greatest dimensions) was palpable in the left antecubital fossa. The magnetic resonance imaging (MRI) of the forearm revealed a well-defined, non-enhancing, homogenous, fat intensity lesion in the left antecubital fossa, attached to the proximal radius. The patient underwent surgical excision of the lump with decompression of the PIN in the radial tunnel. Histopathology confirmed the diagnosis of parosteal lipoma. Although the diagnosis was elusive at the very outset, yet prudent clinical judgment, appropriate ancillary investigations and timely surgical intervention resulted in optimal functional recovery of the hand drop. There was complete motor recovery at 4-months follow up with no recurrence of the lipomaafter one year.