Reactive epithelial hyperplasia is a well-known phenomenon which occurs adjacent to certain neoplasms such as cutaneous fibrous histiocytoma, granular cell tumor, Spitz nevus, and melanoma. We report 46 cases of paratumoral follicular and epidermal hyperplasia associated with basal cell carcinoma (BCC). This reactive process associated with BCC has certain characteristic features. It is focal, superficial, and predominantly folliculocentric. It may resemble other tumors such as squamous cell carcinoma and may appear in sections where BCC is absent. The recognition of this entity may help dermatopathologists avoid misdiagnosing this process as a tumor and can suggest further search (section through the block or rebiopsy) when this reactive phenomenon is seen in sections without the associated BCC.