Introduction: Most biopsy specimens are diagnosed by interpretation of glass slides. However, some conditions like pseudoepitheliomatous hyperplasia (PEH) and squamous cell carcinoma (SCCa) may have overlapping characteristics requiring additional testing. The aims of these studies were: 1- to examine an objective method to define the incidence of PEH in granular cell tumors (GCTs), and 2- to develop a process to differentiate PEH from SCCa. Methods: A definition of PEH in GCTs was formulated, interobserver agreement calculated, and the incidence of PEH in GCTs determined. We histomorphometrically measured and compared the proportions of cases with positive immunohistochemical marker. Results: Use of our definition of PEH resulted in a high level of agreement. The proportion of melanocytes between PEH and SCCa cases was not significantly different. Conclusion: Our definition of PEH proved to be reliable and should be further validated. Melan-A is not capable of differentiating PEH and SCCa.