Distal ventriculo-peritoneal shunt migration and extra-peritoneal CSF pseudocyst formation are unusual complications of shunt placement. We present a 65-year-old-female who received a subgaleal-peritoneal shunt to decompress a post-surgical subgaleal fluid collection. Eight weeks later, shunt series showed tight coiling of the distal catheter, and operative exploration found the distal shunt tip to have migrated superficial to the rectus sheath, where it had become encapsulated in a pre-peritoneal CSF pseudocyst. Migration of the distal catheter into the abdominal wall was likely due to local inflammation of the inner surface of the abdomen, with pressure from intestinal peristaltic movements and intra-abdominal pressure, and continued inflammation at the distal catheter tip may have caused formation of a pre-peritoneal CSF pseudocystic dilatation. To date, this is the first reported case of distal shunt migration into the abdominal wall with subsequent formation of an extra-peritoneal pseudocyst and represents a rare event in the surgical management of peritoneal shunts.