Parosteal osteosarcoma is characterized as a densely ossifying lesion, usually occurring on the surface near the metaphyses of a long bone. The histological pattern is a well- differentiated mature bone trabeculae with a hypocellular spindle-cell stroma. The cytological details are those of a low-grade malignant lesion. The natural history of this lesion is indolent local growth, late invasion of the underlying bone, and infrequently, distant metastasis. However, there is a significant risk of eventual dedifferentiation into a high-grade lesion. We report here-a case of parosteal osteosarcoma dedifferentiated into a high-grade lesion, which occurred in the left distal femur of a 40-years-old woman, and discuss the experience in detail.