Retroperitoneal teratomas are uncommon neoplasms that cause diagnostic dilemmas in neonates during the evaluation of abdominal cystic mass lesions. Down syndrome (DS) is a chromosomal abnormality with an extra third copy of chromosome 21. Due to chromosomal instability, DS is inferred to be a cancer predisposition syndrome. The malignancy pattern in DS is unique with higher incidence of hematological malignancies and solid tumors are rarely reported. Down syndrome neonate was incidentally diagnosed with a retroperitoneal cystic lesion along the left kidney during evaluation for poor feeding on ultrasonography, raising suspicion of an adrenal hemorrhagic cyst. CECT abdomen and pelvis revealed complex cystic lesions along the left renal hilum, with the possibility of cystic neuroblastoma, retroperitoneal cystic teratoma, and cystic lymphangioma. Tumor markers were within normal limits. Surgical exploration revealed a left renal hilar solitary cystic mass lesion, which was excised in toto with a probable intraoperative diagnosis of cystic lymphangioma. The postoperative course was uneventful. Histopathological examination confirmed that the lesion was a mature cystic teratoma. The child is doing well postoperatively at the one-year follow-up. Neonatal retroperitoneal teratomas are unusual neoplasms. A favorable outcome can be achieved, with early diagnosis and treatment.