Subcutaneous granuloma annulare (SGA) is a rarely reported subtype of granuloma annulare that occurs almost exclusively in children. The etiology of these lesions is unknown, although a possible relationship to insulin-dependent diabetes mellitus (IDDM) has been proposed in the literature. Here we present an unusual case of SGA on the right forearm in a 3-year-old girl. Unlike the typical lesions noted on the extremities, on magnetic resonance imaging her lesions involved the subcutaneous tissue and adjacent muscles in multiple locations. Histopathologically, the case was consistent with SGA but was unusual in its distribution involving multiple muscles, a finding that has not been previously reported. Weeks after incisional biopsy, she was readmitted with diabetic ketoacidosis (DKA) secondary to IDDM. After treatment of her DKA and control of her glycemia, the forearm SGA vanished, which supported the pathologic diagnosis and alleviated our concerns secondary to the unusual distribution.