Differential Diagnosis: Lesion showing a short T1 and T2 relaxation (i.e. high signal intensity on both) include:
Type I craniopharyngioma
Chronic hemorrhagic lesions
Dermoid tumors
Cholesterol cysts or granulomas
Rathke cysts.

Diagnosis: Dermoid

Reference:
uhrad.com - Neuroradiology Imaging Teaching Files
Case Four - Dermoid