Background: Tinea capitis is a common pediatric dermatophytosis involving the scalp, hair shafts, and follicles, most frequently caused by Trichophyton, Microsporum, and Nannizzia species. Although most cases are non-inflammatory, a subset progresses to kerion celsi. While appropriate antifungal therapy typically leads to resolution, persistent inflammation may occur despite microbiological clearance, suggesting additional pathogenic mechanisms. We report a 7-year-old male presenting with a chronic pseudoalopecic plaque on the scalp following inflammatory tinea capitis, with negative mycological studies but histopathological evidence of granulomatous dermatitis. Dermoscopic-guided removal of keratin plugs and ingrown hairs resulted in clinical improvement. This case highlights a novel mechanism of persistent inflammation in kerion celsi associated with hair shaft fragmentation, aberrant follicular penetration, and retention of keratinous debris acting as endogenous foreign bodies, triggering a chronic granulomatous response.