Renal replacement lipomatosis can be defined as the proliferation of fibrofatty tissue which subsequently replace the renal parenchyma. It is usually benign unilateral and occurs as a result of severe atrophy or destruction of the renal parenchyma, due to a calculus with secondary proliferation of renal sinus, renal hilus, and perirenal fatty tissue to a variable extent.A 55yr old female presented to surgeon with history ofpain and swelling in right flank. On CECT abdomen there was seen non functional right kidney with staghorn calculi along with perirenal abscess. Patient was treated with nephrectomy and drainage of collection. Intraoperatively Perirenal Abscess extending to psoas and iliopsoas region along with dense adhesion between kidney and liver was found. The multiple sections studied from the lesion showed extensive fibrofatty tissue with few tubule like structures lined by cuboidal epithelium and containing dense eosinophilic secretions. There is seen mixed inflammatory infiltrates with granulomas. Histological features confirmed that Renal replacement lipomatosis with granulomatous inflammation.The clinical importance of RRL is that it stimulates fat-containing tumors in the kidney or its vicinity such as lipomas, angiomyolipomas and liposarcomas can be misdiagnosed preoperatively. Hence this case report has been presented to create awareness of this condition among the pathologist and practicing urosurgeons.