Atypical fibroxanthoma (AFX) is a dermal-based, low-grade neoplasm with no specific lineage of differentiation. The occurrence of AFX with osteoclast-like giant cells is exceptionally rare. Less than 20 cases have been reported in the literature. A 77-year-old man with a medical history of multiple basal and squamous cell carcinomas of the skin, presented with a progressively growing erythematous nodule on the sun-damaged right central parietal scalp. A shave biopsy showed a dermal spindle cell proliferation accompanied by numerous osteoclast-like multinucleated giant cells and predominant atypical mitotic figures. The immunohistochemical staining showed a diffuse positive staining for CD68 and SMA, patchy staining for CD10, and negative staining for SOX-10, pan-cytokeratin, CK5/6, S100, CD34, and desmin. The tumor was completely excised with negative margins. A subsequent follow-up over a period of 13 months showed no recurrence. Distinguishing AFX with osteoclast-like giant cells from both malignant and benign skin lesions with osteoclast-like giant cells is crucial. Although AFX tumors display worrisome malignant histologic features, most cases have a favorable prognosis with a local recurrence rate below 5% and exceedingly rare metastasis.