Precocious puberty is the onset of pubertal development at an earlier age than is expected based upon established normal standards. The cause of precocious puberty may range from a variant of normal development (eg. premature adrenarche or isolated premature thelarche) to pathologic conditions with significant risk of morbidity and even death (eg. malignant germ-cell tumor or astrocytoma). A case of an 18 month old female presenting with vaginal bleeding following a previously noted breast enlargement was described. Initial assessment based on the patient's history and physical examination is suggestive of precocious puberty. Hormonal studies indicated normal levels of FSH and LH, with an elevation in estradiol. Radiographic analysis showed a normal bone age. Cranial MRI revealed no abnormal masses. Sonographic evaluation showed bilateral cystic masses in the ovaries. A diagnosis of peripheral precocious puberty associated with functional ovarian cysts was made, and the patient was monitored for progression of pubertal development.