Basaloid follicular hamartoma (BFH) is a rare cutaneous lesion associated with the acquisition of small papules that remain stable for many years. Basaloid follicular hamartoma lesions can present sporadically or as part of an inherited syndrome. Occasionally, biopsies of BFH lesions are interpreted as basal cell carcinoma (BCC), which necessitates complete removal of the lesion. In this report, we characterize a case of a familial BFH syndrome and discuss the clinical, histologic, and molecular features of BFH lesions that help to distinguish it from BCC. The BFH lesions in our patients remained stable for many years. Histologically, BFH lesions exhibit fewer mitoses and decreased single cell necrosis when compared with BCC. Immunohistochemical staining for the proliferation markers proliferating cell nuclear antigen and Ki-67 demonstrated less staining in BFH than in BCC. In addition, levels of PTCH (patched) mRNA were increased relative to unremarkable epidermis in familial BFH lesions but to a lesser degree and in a different pattern than that seen in BCC. In summary, familial BFH can be distinguished from BCC based on clinical, histologic, and molecular features and is associated with deregulation of the PTCH pathway. Basaloid follicular hamartoma may represent an indolent lesion within the spectrum of basaloid epithelial neoplasms associated with deregulation of the PTCH signaling pathway. We discuss this case in parallel with a growing body of literature that supports the nosologic designation of BFH.