Tailgut cyst, an unusual presacral lesion, is lined by a variety of epithelial types including squamous, columnar, transitional and cuboidal epithelium. Disorganized fascicles of smooth muscle may be seen in the cystic wall. Tailgut cysts are usually multiloculated, and often afflict adult women. In rare cases, adenocarcinoma arises within the tailgut cyst. We present a carcinoid tumor developing from the tailgut cyst. The tumor cells grow in ribbon and festoon patterns and are positive for argyrophilic granules. Immunostains for neuron-specific enolase are also positive. Ultrastructurally, dense-core, membrane-bounded neurosecretory granules are present.