Pleomorphic neoplasms are typically associated with high-grade malignant behavior, but this does not readily apply to primary cutaneous tumors. Despite morphologic features suggestive of malignancy, atypical fibroxanthoma, the classic example of a pleomorphic dermal neoplasm, is characterized by indolent clinical behavior. Atypical fibroxanthoma is a distinctive clinicopathologic disease affecting sun-damaged skin of elderly males. Histologically, it is often ulcerated and dermal based with pushing growth, characterized by a sheet-like and fascicular growth of pleomorphic epithelioid, spindled, and multinucleated tumor cells with brisk and atypical mitotic activity. However, no positive discriminatory histologic or immunohistochemical features exist. Its diagnosis is one exclusion with a wide differential diagnosis, mainly including other mesenchymal, melanocytic, and epithelial neoplasms. Particular considerations are pleomorphic dermal sarcoma, invasive melanoma, squamous cell carcinoma, metaplastic carcinoma, poorly differentiated cutaneous angiosarcoma, cutaneous leiomyosarcoma, myxofibrosarcoma, variants of fibrous histiocytoma (FH), pleomorphic fibroma, and non-neural granular cell tumor. The behavior of these tumors is varied and ranges from outright malignant to entirely benign, requiring confident diagnosis to reliably predict behavior and guide treatment. Although challenging, because of significant clinical and pathologic overlap, it is usually possible to establish a definitive diagnosis when attention is paid to the often subtle differentiating features. This requires careful tumor sampling, recognition of the subtle distinguishing morphologic features, judicious use and analysis of immunohistochemistry, and interpretation of the findings in the appropriate clinical setting.