Pseudoepitheliomatous hyperplasia (PEH) arises in areas of chronic inflammation and can be mistaken for squamous cell carcinoma, leading to unnecessary removal of more tissue. We present a study of 21 patients having delayed reconstruction of defects left by Mohs micrographic surgery (MMS) to remove facial skin cancers. Reconstruction was done at an average of 6 days after MMS. Four of these 21 patients (19%) had PEH in the wound margins. Presence of PEH did not correlate with age, sex delay in reconstruction, frequency of wound care, size or location of the defect, type of tumor, or smoking status. During an average 24-month follow-up, none of these four patients had tumor recurrence, suggesting that the benign diagnosis of PEH was correct. We detail the histologic features of PEH, and describe techniques for minimizing confusion with squamous cell carcinoma.