Introduction: Malignant phyllodes tumor accounts for less than 1% of breast tumors and 2 to 3% of fibroepithelial tumors of the breast. They are derived from intralobular or periductal stroma and most of them are benign. The stromal component of phyllodes tumor has the potential to undergo metaplasia to cartilage, bone, smooth muscle and striated muscle as well as their respective malignant neoplasms. The liposarcomatous differentiation of the stromal elements of phyllodes tumor is extremely rare. Case Report: We report a 27 year old female with a history of a mobile lump in the left breast presenting clinically and cytologically similar to a fibroadenoma. Histopathological examination revealed features of Malignant phyllodes tumour with liposarcomatous differentiation. Conclusion: Malignant phyllodes tumour is very rare and represents less than 1% of breast malignancies. It presents in females more than 40 years of age as a large mass. Malignant transformation is rare and heterologous liposarcomatous differentiation is unusual. This case is presented to illustrate that in a small mobile nodule of the breast presenting in young women clinically as a fibroadenoma, the possibility of a malignant phyllodes tumour should also be considered. Hence a thorough histopathological examination is necessary to rule out a malignant component. A regular follow up is needed in such cases to monitor for recurrence.