A ten and half-year-old spayed female Shih Tzu-terrier dog was presented with swollen mass in the right pelvic limb. The mass was first noticed by the owner three months prior to the presentation but it had enlarged significantly during the past seven days before presentation resulting in pain and lameness. Clinical examination revealed the presence of a large fluctuant mass with soft tissue consistency in the caudal region of the right stifle joint with pain elicited during joint flexion. A well circumscribed large fatty tumor situated between the semimembranosus and semitendinosus muscles was encountered during surgical exploration of the affected area under general anesthesia which was completely removed. Diagnosis of intermuscular lipoma was confirmed based on clinical findings, the gross appearance of the tumor, and the presence of mature adipocytes in histological sections. This report describes clinical signs, physical examination, and diagnostic imaging findings along with surgical treatment of canine intermuscular lipoma, a rare form of lipoma, and benign mesenchymal tumor of adipose tissue situated between muscle bellies which is not locally invasive and does not metastasize. To the best of our knowledge, this type of canine tumor has not been previously reported in Iran.