Mixed epithelial and stromal tumor (MEST) is a distinctive adult biphasic neoplasm of the kidney characterized by the presence of solid and cystic areas composed of spindled stroma and epithelium lining tubules and cystic spaces respectively. Most MESTs are benign although sarcomatous transformation has rarely been reported. It has not been clearly established whether the epithelial component represents entrapped tubules or constitutes a true neoplastic component. We report an unusual case of a biphasic tumor of the kidney with a benign stroma and a focal component of papillary carcinoma arising in one of the cysts and discuss its pathogenesis.