The pathogenesis of middle ear cholesteatoma continues to be highly debated. In recent years, there has been a substantial improvement in the understanding of the pathophysiology of this disease. This chapter provides a summary of the history and evolution of cholesteatoma and a review of the recent literature that pertains to the pathophysiology of congenital and acquired cholesteatoma. An emphasis is placed on the mechanism of osteolysis and the factors predictive of aggressiveness and recidivism.