Inflammatory myofibroblastic tumor (IMT) has been described as a pseudosarcomatous proliferation of spindled myofibroblasts admixed with lymphoplasmacytic cells. The various terminologies like inflammatory pseudotumor, plasma cell granuloma, and inflammatory myofibrohistiocytic proliferation, used to describe this entity, highlight the controversial etiopathogenesis of this relatively indolent neoplasm. IMT has now been described in different anatomic locations. However, cases occurring in the gastrointestinal tract are rare with very few cases described in the appendix. We present a case of inflammatory myofibroblastic tumor appendix with mucosal dysplasia in a 41-year-old male, presenting with abdominal pain and lump in the right iliac fossa. Aspiration cytology yielded few atypical epithelial cells and spindle cells in a mucinous background, suggesting the possibility of pseudomyxoma peritonei. Awareness of IMT appendix with rare presence of mucosal dysplasia may help in preventing overzealous resection, especially in situations that on preoperative evaluation may suggest malignancy.