Lipofibromatous hamartoma is a rare tumour of peripheral nerves which is characterised by an excessive infiltration of the epineurium and perineurium by fibroadipose tissue. To the best of our knowledge, only approximately 88 cases are reported in the literature. We report a rare case of lipofibromatous hamartoma of the median nerve causing secondary carpal tunnel syndrome in a 25 year old patient. This patient was treated conservatively with decompression and biopsy and experienced a complete resolution of symptoms post-operatively. Magnetic resonance imaging may be used to diagnose this lesion as it has very distinctive characteristics. Multiple conditions have been associated with this lesion and a greater understanding of these associations may clarify the pathogenesis. The architecture of the tumour makes excision very challenging and the surgical management remains controversial. A review of the literature regarding the etiology, pathogenesis and surgical management of lipofibromatous hamartoma is included.