Purpose To determine diagnostic performance of MRI radiomics-based machine learning for classification of deep-seated lipoma and atypical lipomatous tumor (ALT) of the extremities. Material and methods This retrospective study was performed at three tertiary sarcoma centers and included 150 patients with surgically treated and histology-proven lesions. The training-validation cohort consisted of 114 patients from centers 1 and 2 (n = 64 lipoma, n = 50 ALT). The external test cohort consisted of 36 patients from center 3 (n = 24 lipoma, n = 12 ALT). 3D segmentation was manually performed on T1- and T2-weighted MRI. After extraction and selection of radiomic features, three machine learning classifiers were trained and validated using nested fivefold cross-validation. The best-performing classifier according to previous analysis was evaluated and compared to an experienced musculoskeletal radiologist in the external test cohort. Results Eight features passed feature selection and were incorporated into the machine learning models. After training and validation (74% ROC-AUC), the best-performing classifier (Random Forest) showed 92% sensitivity and 33% specificity in the external test cohort with no statistical difference compared to the radiologist ( p  = 0.474). Conclusion MRI radiomics-based machine learning may classify deep-seated lipoma and ALT of the extremities with high sensitivity and negative predictive value, thus potentially serving as a non-invasive screening tool to reduce unnecessary referral to tertiary tumor centers.