Xanthogranulomatous inflammation of the pancreas is an extremely rare entity mimicking pancreatic neoplasia. Elevation of tumor markers has seldom been reported in xanthogranulomatous inflammation of the pancreas, rendering the diagnosis difficult and highlighting the importance of a meticulous histopathological examination. A 58-year-old male presented with severe abdominal pain and anorexia for six months. A heterogeneously enhancing solid cystic mass was detected in the pancreatic head on contrast enhanced computed tomography. Endoscopic ultrasound guided aspiration yielded fluid showing elevated levels of CA19-9 (12000 IU/ml) and CEA (221ng/ml) with a concordant increase in the serum tumour marker levels (CA 19-9:407 IU/ml; CEA: 70 ng /ml). Clinical, radiological and biochemical evidence favouring malignancy prompted a Whipple's procedure. A thorough histopathological examination of the specimen failed to reveal malignancy. Sheets of macrophages (CD 68 +, HAM 56 +), chronic inflammatory cells, fibroblasts and proliferating capillaries replacing most of the pancreatic parenchyma were seen instead, nailing the diagnosis of xanthogranulomatous inflammation of the pancreas. To the best of our knowledge this is the first report of xanthogranulomatous inflammation of the pancreas without associated malignancy displaying an elevation of serum and fluid tumour markers. After seven months of follow up, the patient is asymptomatic and is doing well.