Reactive angioendotheliomatosis (RAE) is a rare angio-proliferative disease which commonly exists with some underlying systemic disease. RAE clinically presents as an ulcerated lesion which can be single or multifocal. It can also present as violaceous papules or plaques. The rarity of hobnail cell change in RAE can cause confusion with other vascular neoplasms which exhibit these changes like Endovascular papillary angioendothelioma also called Dabska Tumor, hobnail hemangioma and angiosarcoma etc. Most of the lesions of RAE are superficial in location but occurrence in deeper tissues is also known. We describe here a case of a young man presenting with a swelling in the first web space of right hand that has been diagnosed with arteriovenous malformation and was given the histological diagnosis of intravascular reactive angioendotheliomatosis with focal areas showing hobnail cell change. Also, all the lesions in differential diagnoses should be ruled out before making the diagnosis of RAE and before starting the treatment. Here, we review the usual presentation of RAE, with rare phenomenon of focal hobnail cell change which poses a diagnostic pitfall and the criteria to rule out other possible differential diagnosis that has to be taken into consideration in this setting.