Background: Subcutaneous phaeohyphomycosis is one of the commonest dematiaceous emerging fungal infection. It has invariably fatal outcome when involve any of the vital anatomical area. A case of phaeomycotic cyst of upper limb is being reported who presented in the Department of General Surgery, Government Medical College Hospital, Chandigarh. Methods: The patient was 45 years old female who presented with a swelling in her right forearm for the past 3 months which had been gradually increasing in size. There was no pain associated with swelling. There was no underlying immunodeficiency disease and her HIV test were found to be negative. She was not having diabetes mellitus also. On examination the swelling was 3 cm in diameter, soft to firm and mobile as it was not attached to the underlying tissue. On aspiration, frank pus came out from the swelling and the entire pus was drained. The KOH wet mount of pus showed dematiaceous septate hyphae. On Sabouraud's Dextrose Agar black mycelial growth was seen after a week time on incubation at 25 and 37 °C. The histopathological examination also confirmed the same findings. Results: The slide culture from grayish black mycelial growth was put up. There was no induction of sporulation thereby speciation was not feasible hence the strain was sent to the Centraalbureau voor Schimmelcultures (CBS), Utrecht, The Netherlands. The strain was identified on the basis of morphological features and molecular typing as Pyrenochaeta romeroi. The patient was treated with incision and drainage and the entire pus was drained. The drained purulent material also grew the same fungus. There was no recurrence and patient improved completely. Conclusions: The dematiaceous fungus, Pyrenochaeta romeroi, is involved in mycetoma cases however; it is the only second case being reported in a cystic swelling. Subcutaneous phaeohyphomycosis should be kept as one of the differential diagnosis in such type of patients so that diagnosis can be made in time and promptly treated, accordingly.