In this report, a 55-year-old woman with Graves disease and exophthalmos had a recurrent nodule on the foot. Her initial biopsy and excision specimens were believed to be consistent with spindle cell lipoma, which aligned with her early tumor-like clinical morphology. Her tumor recurred after excision, which is not consistent with spindle cell lipoma. As her condition progressed, her clinical morphology became more consistent with localized myxedema and her biopsies were congruent, securing clinicopathologic correlation. With standard treatment for localized myxedema, she improved significantly. This case emphasizes how clinicians need to have high suspicion for localized myxedema in patients with history of Graves disease and exophthalmos. It also emphasizes how localized myxedema should be included in the histologic differential diagnosis for spindle cell lipoma with prominent myxoid stroma, particularly in those not responding to treatment as anticipated.