Congenital granular-cell tumors are uncommon benign neoplasms of unknown cause that develop primarily in gingival tissue and usually do not recur after surgical excision. Untreated, these neoplasms either cease to grow or “spontaneously” regress after birth. In this report, we describe an unusual case of a child with several congenital granular-cell neoplasms that arose on the lips and continued to increase in size as the child grew. Histologic examination of the neoplasms revealed them to be composed of granular and mesenchymal cells associated with abundant collagen fibers and prominent vascular structures. Ultrastructural study disclosed typical granular cells and a preponderance of immature mesenchymal cells, some of which appeared to be transitional or early granular cells. We interpreted these findings to mean that primitive mesenchymal cells are the proliferative elements and precursors of granular cells in congenital granular-cell neoplasms. The presence of numerous immature mesenchymal cells corroborates the clinical impression that the lesions were growing. Based upon the histological and Ultrastructural findings reported here, and a review of the literature, we favor a mesenchymal or endothelial-cell origin for congenital granular cell neoplasms.