Sebaceous carcinoma is a malignant neoplasm that occurs most commonly in the periorbital area, usually the eyelid. Its periocular location predisposes to smaller biopsies, thus complicating diagnosis. The neoplasm tends to exhibit aggressive local behavior, metastasizing to regional lymph nodes, and distant organs. Disease limited to the epithelium is rare, with less than 10 cases reported in the literature. We present the case of a 73-year-old woman who presented with left upper eyelid entropion and conjunctival erythema. Multiple punch biopsies showed an intraepithelial proliferation of atypical basaloid cells with enlarged and hyperchromatic nuclei intermingled with vacuolated cells containing bubbly cytoplasms and scalloped nuclei, consistent with a diagnosis of intraepithelial sebaceous carcinoma. After subsequent orbital exenteration and histological examination, a wide intraepithelial sebaceous component was identified; however, there was no invasive growth. This case highlights the rarity and the potential diagnostic pitfalls of intraepithelial sebaceous carcinoma.