Lichenoid dysplasia is a lesion similar to oral lichen planus with epithelial dysplasia. It can be clinically mistaken for oral lichen planus, but has histologic features of dysplasia and a true malignant predisposition. It is not a variant or transitional form of lichen planus but, instead, represents a distinct entity that has a true potential for malignant transformation. In addition to abnormal epithelial maturation and cytology, lichenoid dysplasia exhibits other histologic features that separate it from oral lichen planus. Lichenoid dysplasia and lichen planus share many clinical and microscopic features, leading to the frequent misdiagnosis of unrecognized lichenoid dysplasia as lichen planus. We experienced a case of lichenoid dysplasia in the oral mucosa. We treated this patient with surgical excision. The patient has now been followed for two months. It is important to recognize this precancerous condition and inspect the excision site and remaining oral mucosa during long-term follow-up.