Dermoid cyst is a kind of mature cystic teratoma that contains only one germ layer. It usually occurs in the head and neck, retroperitoneal dermoid cysts are uncommon. Teratomas are characterized by mixed density and features like calcification or air-fluid level. Here, we present a case of 40-year-old female with a 12.1 cm × 10.0 cm retroperitoneal fatty mass which showed no calcification and few other specific characteristics of teratoma. Thin and uniform separations were observed. On PET-CT, it was adherent to several retroperitoneal organs like left adrenal gland and left kidney, and had a close relationship with several retroperitoneal vessels like aorta, superior mesenteric arteriovenous, left superior renal artery and inferior vena cava. On PET-CT, mild 18F-FDG uptake was observed. Based on the above imaging findings, a clinical diagnosis of liposarcoma was considered. After laparotomy and open surgery transit through a left vertical incision, the histopathologic examination revealed a retroperitoneal dermoid cyst. During a 2-month followup, the patient recovered well without discomfort and recurrence. Comparison between dermoid cyst and liposarcoma in imaging findings was performed. In dermoid cysts, there can be thin and uniform separations, rather than linear, localized and irregular high density in liposarcoma. The difference between dermoid cyst and mature cystic teratoma is yet to be clarified. A review of clinical and histopathological features of retroperitoneal dermoid cyst was also performed to enhance the level of the diagnosis and management.