Malignant transformation arising in the background of jaw cysts is a rare and often misdiagnosed condition, particularly when developing from residual root-derived cysts. We present a case of epithelial malignancy originating from a residual root-derived cyst in the mandible of a man around 50 years old. Histological evaluation of the sections revealed that the epithelial lining of the cystic lesion contained well-differentiated squamous cell carcinoma components. Finally, a segmental mandibulectomy was performed, and the defect was reconstructed with free iliac bone grafting. This case underscores the critical role of chronic inflammation in the malignant transformation of mandibular cysts and enriches the current database on odontogenic cyst malignancy.