A parosteal osteosarcoma of the distal femur with a typical radiographic and macroscopic appearance is reported. On histology the tumour was dominated by large numbers of osteoclast-like giant cells in a fibro-osseous background and islands of immature bone. Most of the neoplastic bone lacked osteoblastic rimming. There was no spatial relationship between the giant cells and areas of haemorrhage. Signs of 'dedifferentiation' were lacking. Cytogenetic a analysis revealed telomeric associations which are frequently found in giant cell tumours of bone. Parosteal osteosarcoma may, on histological appearances, hardly be recognizable as malignant. In addition, unusual changes such as abundant giant cells may be misleading in the absence of clinico-pathological correlation.