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Introduction: Pigmented VillonodularSynovitis is a rare, benign condition which is locally aggressive and can undergo malignant transformation. It is characterized mostly with a hyper plastic synovium, large effusion and bone erosions. On an average it is clinically correctly identified after 4.4 years of presentation. It mostly involves the smaller joints and in larger joints commonly seen in the knee joint. Case Report: 49 years old male presented with right knee pain since 3 months, insidious in onset, localized in nature, with difficulty in walking and sitting for a long time with no episode of injury on the right knee. The patient had one episode of instability with occasional episodes of locking. Clinically there was retro patellar tenderness with full range of movement of the knee. MRI showed a lesion measuring approximately1.5*1.5*0.5 cm in the retropatellar space suspected to be a loose body. Arthroscopically a localized soft tissue growth was noted in the retropatellar space which was resected. Histology of the resected lesion demonstrated localized PVNS. Conclusion: The findings in this case suggest that localized PVNS may be mistaken as a loose body radiologically and there must be a high suspicion of PVNS in a localized abnormal growth in the knee joint.