This is a granuloma resulting from a dental sinus.   They arise when there is longstanding dental abscess or necrosis of a tooth.  When a dental sinus connects with the skin rather than the intraoral mucosa, they characteristically occur along the border of the mandible, but may also arise around the maxilla.  The tethering of the skin around the sinus opening is a feature and may be appreciated either visually or on palpation.

The teeth adjacent to the sinus should be inspected for signs of previous fillings, caries, and local tenderness on tapping.

Radiology is the most important investigation and will show bone loss around the root tip of the affected tooth.  MRI or CT may be required.  Occasionally insertion of a radio-opaque probe into the sinus may be needed to identify the affected tooth.

Removal of the affected tooth, retained root or necrotic material is required and the sinus should heal readily thereafter.