Malignant peripheral nerve sheath tumors are usually Schwann cell derived. Differentiation along mesenchymal lines is uncommon. Herein we present an example with smooth muscle differentiation occurring in the left distal forearm of a 62-year-old male with neurofibromatosis type I. Incisional biopsy of the slowly growing mass demonstrated a low-grade malignant peripheral nerve sheath tumor with strong S-100 protein immunoexpression as well as focal smooth muscle actin staining in atypical neoplastic cells. Immunostains for epithelial membrane antigen, neurofilament protein, glial fibrillary acidic protein, CD57, desmin, and myogenin were negative. The MIB-1 labeling index was 5.4%. Electron microscopy revealed arrays of microfilaments (actin myofilaments) variably associated with fusiform dense bodies, plasmalemmal micropinocytotic vesicles, and foci of external lamina (basement membrane) consistent with smooth muscle differentiation. Smooth muscle should be added to the spectrum of differentiation exhibited by malignant peripheral nerve sheath tumors. Its recognition requires exclusion of the alternative diagnosis of leiomyosarcoma.