Acquired cholesteatoma is a disease of the posterior superior part of the middle ear cleft that may arise from the external epithelium of the tympanic membrane. Three distinct epithelial zones of differing thicknesses characterize the development of this latter epithelium, and the thickness differences and their distribution in the eardrum and deep external canal, which delineate the zones, are found at all stages of life, including the mature ear. It is postulated that epithelial migratory activity follows the pathways of early development, the flow occurring through the three zones. The detailed validity of this model was confirmed by otoscopic photography of dye movements on the tympanic membrane. Cholesteatoma may develop from the earliest and most active of these zones situated on the pars flaccida. The pathologic anatomy of cholesteatoma suggests vigorous growth. Retraction pockets provide a source for bands of squamous epithelium growing into the middle ear. Cholesteatoma and tympanic membrane epithelium move en masse in tissue culture, a property not shown by any other stratified squamous epithelium.