The objective of this study was to evaluate the appearance of localized giant cell tumour of the tendon sheath (GCTTS) on unenhanced and Gd-enhanced MR images. MR images of 13 histologically proven cases of localized GCTTS were evaluated for mean size, location, homogeneity and signal intensity (SI) on both T1- and T2-weighted images, and enhancement pattern. All lesions except 1 affected young adults. On T1- and T2-weighted images, lesions showed predominantly low SI equal to or slightly higher than skeletal muscle. On Gd-enhanced T1-weighted images, strong homogeneous enhancement was seen. These findings reflect the underlying histological composition of the lesion; haemosiderin deposition in xanthoma cells, shortening T2-relaxation time, and abundant collagenous proliferation are responsible for low SI on T1- and T2-weighted images. Strong homogeneous enhancement originates from numerous proliferative capillaries in the collagenous stroma. We conclude that these characteristic MR features, together with clinical information, are a valuable diagnostic tool in offering a correct preoperative diagnosis.