Primary alveolar rhabdomyosarcoma (RMS) involving perineal skin is extremely rare, particularly in the infant age group. We report a case of an alveolar RMS in a newborn with abnormal symmetrical perineal overgrowth, causing ambiguous morphologic structure of the genitalia. Clinical and imaging studies were suggestive of Proteus syndrome with lymphatic malformation. Histologic examination of the mass showed cutaneous alveolar RMS with areas of embryonal and pleomorphic RMS features. Multiple superficially located, cystic-dilated spaces with loose edematous-mucoid hypocellular stroma gave a gross morphologic structure similar to that of lymphatic-type excrescences.