We have presented the first case of a lipoma-like liposarcoma of the soft tissues with high-grade malignant transformation to a high-grade osteosarcoma, the latter component of which responded well to systemic chemotherapy. With 4 months of follow-up the patient is without evidence of disseminated disease. The various types of liposarcoma are listed and several described in some detail. Of particular importance is the potential for development of a highly malignant sarcoma from a relatively indolent low-grade liposarcoma, with even osteosarcoma developing.