Abdominal pseudocysts are an uncommon complication of ventriculoperitoneal (VP) shunts. We present the case of a 4-year-old boy with a history of complicated hydrocephalus managed with a VP shunt due to sequelae of prematurity. The patient presented with abdominal distention, and a pseudocyst was diagnosed. Despite shunt externalization and aspiration, the pseudocyst continued to produce up to 1 liter of serosanguineous fluid per day. After MRI revealed malignant features within the pseudocyst, laparotomy was performed and the pseudocyst was partially excised. Pathology reports suggested sarcoma. The cystic mass grew back aggressively, accompanied by distant metastasis. The patient's condition deteriorated and he died from his disease. To our knowledge, this represents the first report of an abdominal malignancy mimicking a pseudocyst and causing VP shunt failure.