The authors describe a case of filum terminale arteriovenous fistula (FTAVF) in association with a large L2-L3 disc sequestration and diffuse lumbar arachnoiditis. A 64-year-old male manifested with chronic back pain and gait difficulty. Magnetic resonance imaging (MRI) of the thoracic and lumbosacral spine revealed spinal cord congestion extending from the conus medullaris to the level of T9. There was a large disc sequestration came from L2-L3 disc herniation. In addition, thickening, clumping, and enhancement of the entire cauda equina were noted, probably representing arachnoiditis. MR angiography (MRA) and spinal angiography confirmed FTAVF at the level of L5. The patient underwent laminectomy with lysis adhesions and obliteration of the fistula. His postoperative course was uneventful. MRI and MRA of the thoracolumbar spine obtained 4 months after surgery revealed complete obliteration of the fistula and significant resolution of spinal cord congestion. Enhancement of the cauda equina roots was no longer visible. Interestingly, the significant resorption of the sequestrated disc was documented on MRI. The formation of the FTAVF in the present study may result from severe spinal canal stenosis caused by a large disc sequestration blocking the rostral venous drainage of the fistula, or chronic inflammation, and adhesions of the caudal nerve roots from lumbar arachnoiditis. It seems that FTAVF may be of acquired origin by this evidence.