We describe a vascular lesion with characteristic clinical and histologic features. The patients when first seen have a small, single, annular, targetoid-appearing lesion. Histologically it is a noncircumscribed vascular proliferation that may extend into the subcutaneous tissue. The earliest finding appears to be a superficial proliferation of ectatic dermal vascular lumina with intraluminal papillary projections. The endothelial cells are flat or conspicuously epithelioid with solid intraluminal projections. The deeper component is composed of angular, lymphatic-like lumina that concentrate around sweat gland coils, often making small hemangiomatous nodules. Extensive red cell extravasation, inflammatory aggregates, and fibrin thrombi are present. In later stages there is extensive stromal hemosiderin deposition. The endothelial cells are weakly positive for factor VIII-related antigen and strongly positive for Ulex europaeus 1 lectin. The lesion appears to be persistent but self-limited. While appearing clinically benign, it exhibits worrisome histologic features. The nosologic designation of this lesion is uncertain, but it shares certain morphologic features with epithelioid (histiocytoid) hemangioma and progressive lymphangioma. It also poses serious differential diagnostic problems with the early phases of Kaposi's sarcoma.