Lipoma of the internal auditory canal is a rare tumor. Clinically, it presents like an acoustic tumor. The diagnosis can be made with the use of a magnetic resonance imaging showing a high intensity on T1‐ and low intensity on T2‐weighted image with no enhancement. Pathologically, this is a soft, smooth, yellow tumor with some fat in it that can resemble grossly any acoustic tumor. The lipoma is intermixed with the eighth nerve and can be adherent to adjacent structures. The growth of a lipoma can be slower than an acoustic tumor. A patient diagnosed with lipoma of the internal auditory canal can often have quite good hearing. As an alternative to surgical removal, another therapeutic option is to watch the growth of the lipoma with periodic magnetic resonance imaging, probably on a yearly basis initially.