A case is reported of deep cutaneous mycosis in an immunosuppressed patient who, after heart transplantation, developed a solitary blue-black skin nodule that was excised. No cultures were taken. The nodule, in the dermis, was a granuloma with microabscesses containing a few pale yellowish-brown fungal spores that were found after much searching in hematoxylin- and eosin-stained sections. Stains for melanin showed numerous spores and septate branching hyphae that also stained with P.A.S. Melanin staining indicated that the fungi were dematiaceous and that the lesion was a phaeomycotic cyst. Staining of stock cultures of fungi for melanin showed good correlation between the amount of pigment in cell walls of fungi and the accentuation of staining when a melanin stain was incorporated.