Occipital neuralgia is a rare pain syndrome characterized by periodic lancinating pain involving the occipital nerve complex. We present a unique case of entrapment of the greater occipital nerve (GON) within the semispinalis capitis, which was thought to be the cause of occipital neuralgia. A 66-year-old woman with refractory left occipital neuralgia revealed an abnormally low-loop of the left posterior inferior cerebellar artery on the magnetic resonance imaging, suggesting possible vascular compression of the upper cervical roots. During exploration, however, the GON was found to be entrapped at the perforation site of the semispinalis capitis. There was no other compression of the GON or of C1 and C2 dorsal roots in their intracranial course. Postoperatively, the patient experienced almost complete relief of typical neuralgic pain. Although occipital neuralgia has been reported to occur by stretching of the GON by inferior oblique muscle or C1-C2 arthrosis, peripheral compression in the transmuscular course of the GON in the semispinalis capitis as a cause of refractory occipital neuralgia has not been reported and this should be considered when assessing surgical options for refractory occipital neuralgia.