An aneurysmal bone cyst (ABC) is a benign bone neoplasm that typically occurs during the first and second decades of life. ABC usually presents as a rapidly growing intramedullary expansile mass with multiple blood‐filled cysts in the metaphysis of the long tubular bones. Here, we report a case of a periosteal solid ABC that was initially diagnosed as a high‐grade surface osteosarcoma. A 10‐year‐old male was referred to our hospital for swelling and tenderness of the left upper arm. Radiography revealed periosteal mass without fluid–fluid levels. On performing open biopsy, the tumor showed hypercellular proliferation of uniform spindle to epithelioid cells with brisk mitotic activity (up to 12/2 mm2) and lace‐like osteoid formation, which was diagnosed as a high‐grade surface osteosarcoma. After one course of chemotherapy using adriamycin and cisplatin, peripheral sclerosis was conspicuous, which led to pathological review and revision of diagnosis as “possibly osteoblastoma.” The patient was disease‐free for 4 years after marginal resection and curettage. Retrospective nanopore DNA sequencing unexpectedly detected a PAFAH1B1::USP6 rearrangement. The fusion gene was further validated using reverse transcription‐polymerase chain reaction and the diagnosis was revised to ABC. Chromothripsis involving chromosome 17 has also been identified. Methylation analysis classified the present tumor as an ABC or non‐ossifying fibroma using t‐distributed stochastic neighbor embedding and unsupervised hierarchical clustering. This case report highlights the utility of nanopore DNA sequencing for soft tissue and bone tumor diagnosis.