There have been less than 100 reported cases of carcinoma in a female urethral diverticulum, with only 10 of these cases being squamous cell carcinoma (SCC). The course of this disease is frequently aggressive, despite multimodality treatment, and most patients die within 2 to 3 years. To our knowledge, carcinoma in situ of the female urethral diverticulum has not been reported to date, and thus, optimal treatment is not well defined. A 41-year-old woman was found to have SCC in situ without evidence of invasive carcinoma after diverticulectomy. She elected close observation and remains disease-free at 2 years. A brief overview is given of the presentation, management, and outcomes of urethral diverticular carcinoma.