A dermoid cyst is an ectodermally differentiated form of teratoma. Its occurrence in the parotid gland is very rare. Such a presentation must be properly evaluated in order to rule out malignancy. We describe the diagnostic evaluation and surgical management of a parotid dermoid cyst in an 18-year-old man. We also review the embryologic pathogenesis of the tumor and the usefulness of the physical examination, preoperative fine-needle aspiration cytology, magnetic resonance imaging, and computed tomography in evaluating the extent of the tumor, its histologic features, and its cystic characteristics. Finally, we discuss the role of surgical management in terms of preserving facial nerve integrity and preventing recurrence.