We describe a 61-year-old Japanese woman who had been aware of a lesion on her left thigh for 10 years. Pathological examination demonstrated a well-circumscribed encapsulated nodule at the dermal-subcutaneous boundary, composed of eosinophilic spindle cell bundles, connective tissue, and numerous small vessels. Immunohistochemically, these eosinophilic cells were positive for α-smooth muscle actin. The granulomatous areas in the tumor were composed focally of epithelioid cells and lymphocytes. The epithelioid cells were negative for α-smooth muscle actin. We diagnosed this case as an angioleiomyoma with epithelioid granuloma. Malignant tumors with granulomatous change have sometimes been reported in the literature, but benign tumors with epithelioid granuloma, such as the present one, are rare. We thought that epithelioid cell granuloma might transform to angioleiomyoma through the action of IL-1 released from vascular smooth muscle cells.