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Endodermal cysts of the central neuraxis are benign, non-neoplastic epithelium-lined cysts arising from endodermal tissue that have been displaced early in fetal life. Intracranial endodermal cysts are rare and usually located in the posterior fossa. The present study involves a 36-year-old man with a typical epithelial cyst in the posterior fossa. Microscopically, the cyst has a simple columnar epithelium with mucus-producing cells, containing an area composed of dysplastic epithelium with evidence of an intraepithelial carcinoma. The atypical cells have a high proliferative fraction demonstrated by Ki-67 immunostain. Based on these findings, the authors view this case as evidence of a malignant transformation of a classic endodermal cyst. The clinicopathologic features and a review of the literature are discussed. [ABSTRACT FROM AUTHOR]