Lateral sphenoid encephalocele, especially within the lateral aspect of the sphenoid sinus, when the sphenoid sinus has pneumatized extensively into the pterygoid recess, are considered exceedingly rare. We report a rare case of lateral intrasphenoidal encephalocele with spontaneous cerebral spinal fluid (CSF) rhinorrhea. Computed tomography demonstrated bilateral arachnoid pit, extensive sphenoid sinus pneumatization, and a defect in the superior wall of the left lateral recess of the sphenoid sinus. Magnetic resonance imaging demonstrated anteromedial temporal lobe herniating through the bony defect.