Fibrous dysplasia is a benign disorder of bone in which proliferating fibrous tissue replaces the bony spongiosa. Cytologic atypia is generally not considered a feature of this proliferating tissue. We present a case of fibrous dysplasia with marked atypical nuclear changes consistent with degenerative or regressive changes. A 42-year-old man presented with an osteolytic lesion of the right iliac bone. Histologic study demonstrated a fibro-osseous lesion with woven bone trabeculae and bland-looking fibrous tissue. Several areas showed atypical cells with enlarged pleomorphic nuclei and bizarre features. There was no change in the nuclear-cytoplasmic ratio nor were mitotic figures identified. The differential diagnosis is discussed. When radiographic and other histologic findings suggest fibrous dysplasia, the atypical nuclear changes should not, by themselves, alter the diagnosis.