Mature cystic teratoma is a common benign adnexal tumour in females. Malignant transformation in a mature cystic teratoma of the ovary is rare, occurring in only 1-2% of cases. The most common malignancy is squamous cell carcinoma, which consists of about 75% of malignant transformations. We describe a 43-year-old female with a 14cm right ovarian mature cystic teratoma with the rare finding of squamous cell carcinoma. The clinical evaluation was done with ultrasound, computed tomography (CT) scan and serologic marker serum CA-125. Exploratory laparotomy was done to remove the mass. Right salpingo-oophorectomy was done. Moderately differentiated invasive squamous cell carcinoma arising in the background of mature cystic teratoma (dermoid cyst) was found. Further, she had total abdominal hysterectomy, left salpingo-oophorectomy and omentectomy, which were disease-free. She is kept on follow-up with ultrasound, CT scan and serum CA-125. Adequately staged patients with disease confined to the ovary have a much better prognosis with 5-year survival rates approaching 95%. Purpose of this case report was to create awareness among physicians while dealing with dermoid cysts of large sizes in older patients.