The purpose of the study is to report an unusual case of encapsulated iron intraocular foreign body (IOFB) of long duration presenting with cystoid macular edema (CME) and normal full-field electroretinogram (ERG). A 28-year-old male presented with a history of metal injury 5 years back and subsequent visual loss in the left eye for 3 months. Fundus examination of the left eye showed an encapsulated cyst-like structure inferior to the disc with the surrounding pigmentary changes and CME. B-scan ultrasonography and computed tomography scan confirmed metallic IOFB. A full-field ERG performed before surgery showed a normal response. He underwent pars plana vitrectomy with IOFB extraction and silicone oil injection as a tamponade. Two months later, silicone oil removal was combined with intravitreal triamcinolone acetonide (IVTA) injection for persistent edema. Meticulous clinical evaluation, imaging, electrophysiological testing coupled with surgical intervention, and IVTA injection resulted in resolution of CME with minimal visual improvement. In conclusion long-standing encapsulated iron IOFB on the retina can cause vision-threatening complications without siderosis.