An ultrastructural study of the interface between aural cholesteatoma and adjacent bone was performed on specimens obtained from human and experimental gerbilline cholesteatoma. When an enlarging cholesteatoma contacted bone, a large number of monocytes and macrophages accumulated in the area of contact. The intervening middle ear mucosa degenerated and bone erosion occurred. Anatomic evidence is provided which indicates that bone erosion in both human and experimental cholesteatoma occurred as a result of the action of multinucleated osteoclasts. These osteoclasts had the ultrastructural appearance of normal osteoclasts with a well developed ruffled border and large numbers of mitochondria. These cells stained readily with acid phosphatase stains. Although many other mononuclear cells were seen in the vicinity of the eroded bone, only the multi-nucleated osteoclasts were associated with disappearance of the lamina limitans of the bone surface. Osteoclasts were commonly found in experimental cholesteatoma, but were infrequent in human cholesteatoma biopsies, presumably because patients undergoing cholesteatoma surgery are often treated with topical installations of corticosteroids which inhibit osteoclasts.