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This is a rare complication of skull fracture that may develop when there is a linear fracture of the skull with separation of the edges of the fracture and laceration of the tough membranous covering of the brain called the dura mater. The arachnoid membranes (very thin, transparent and "spidery" appearing from the myriad tiny blood vessels) can be trapped between the edges of the fracture. When this happens, the natural pulsation of the brain caused by the throbbing of the arteries causes erosion of the bony skull. This complication can occur in adults, but it is most often seen following fracture of the skull in infants and young children.
The condition is detected when the parents note a cystic (soft and squishy, reminiscent of a water-filled balloon) mass on the head of their infant. Initially, the condition can be confused with a cephalohematoma, but the correct diagnosis will become apparent on a simple skull xray.
Potentially, untreated leptomeningeal cyst could lead to seizures, mental retardation, and increased intracranial pressure (hydrocephalus), so surgical repair is imperative. Treatment involves surgical removal of the cyst and repair of the tear in the dura.
I have encountered precisely one of these in 24 years of practice. Source: Rowland: Merritt's Textbook of Neurology, 9th ed., Copyright © 1995 Williams & Wilkins