Bone tumors are a diverse group of lesions that have a broad spectrum of biological behavior. They range from reactive conditions to benign and malignant neoplasms, and their accurate distinction from one another requires careful correlation with their clinical and imaging findings. Clues to the correct diagnosis can be derived from the patient's age, symptoms, and location of the tumor both within the skeleton and the individual bone. Tumor size, radiodensity, margination, cortical integrity, periosteal reaction, and extension into the soft tissues are useful imaging characteristics in determining phenotype and estimating biological potential. In combination, these attributes help build a differential diagnosis that should form the framework for the interpretation of the pathological findings. There are many diagnostic pitfalls, as common bone tumors may have uncommon clinical presentations, and conversely, rare bone tumors may masquerade as garden variety neoplasms. The most important task of the pathologist is to distinguish whether a tumor is reactive or neoplastic, and if neoplastic, benign or malignant—this interpretation can be extremely challenging. In this review, a select group of diagnostically challenging differential diagnoses is explored to provide a guide in generating the correct diagnosis.