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BACKGROUND: We present unique case of a giant extracranial atretic occipital lipoencephalocele in an adult patient with new bone formation within it which was not associated with any developmental malformation of brain. Resection of the lipoencephalocele was performed for esthetic reasons. CASE REPORT: 18 year old female patient presented to the surgery OPD with complains of a large mass in the occipital region present since birth. It was of size of a betel nut at the time of birth and gradually increased in size over a long period of time. It was painless and not associated with any other constitutional symptoms. On examination the rounded fluctuant mass was present in the midline in occipital region covered with alopecic skin with dimpling in the overlying skin. On MRI there was mass showing both T1 and T2 hyperintense signal area suggestive of fat component. Herniation of meninges and atretic brain parenchyma was also seen through a defect in the occipital bone in the midline. There was a Y shaped bony outgrowth seen arising from occipital bone into the mass which was quite unusual in association with an atretic lipoencephalocele. CONCLUSIONS: A large lipoencephalocele with bony outgrowth in an adult patient is a rare presentation of atreic occipital encephalocele.