We studied 20 granuloma annulare (GA) cases (10 interstitial and 10 palisaded) and 19 Kaposi sarcoma (KS) cases (9 "early" and 10 typical). Tissue sections were stained for iron, Hale colloidal iron, human herpesvirus 8 (HHV-8), CD31, CD34, CD68, collagen IV, factor XIIIa, and MIB-1. Iron staining of dermal tissue associated with the lesion was confirmed in all KS cases and no GA cases. Immunohistochemical stains for HHV-8 were positive in all 9 cases of early KS and most cases (9/10) of typical KS. All 20 cases of GA were HHV-8-. CD31, CD34, CD68, factor XIIIa, and MIB-1 were also stained but were difficult to interpret and did not seem specific for GA or KS. Iron staining and immunohistochemical HHV-8 staining in combination were reliable markers for KS compared with interstitial GA. MIB-1 fractions of less than 5% favored a diagnosis of GA, whereas fractions greater than 10% favored a diagnosis of KS. This study provides novel data characterizing iron staining in KS and details the use of iron staining, HHV-8, and MIB-1 to distinguish KS from GA.