We conducted a retrospective study to compare the clinical characteristics of external auditory canal cholesteatoma (EACC) with those of a similar entity, keratosis obturans (KO). We also sought to identify those aspects of each disease that may lead to complications. We identified 6 patients in each group. Imaging studies were reviewed for evidence of bony erosion and the proximity of disease to vital structures. All 6 patients in the EACC group had their diagnosis confirmed by computed tomography (CT), which demonstrated widening of the bony external auditory canal; 4 of these patients had critical erosion of bone adjacent to the facial nerve. Of the 6 patients with KO, only 2 had undergone CT, and neither exhibited any significant bony erosion or expansion; 1 of them developed osteomyelitis of the temporal bone and adjacent temporomandibular joint. Another patient manifested KO as part of a dermatophytid reaction. The essential component of treatment in all cases of EACC was microscopic debridement of the ear canal. We conclude that EACC may produce significant erosion of bone with exposure of vital structures, including the facial nerve. Because of the clinical similarity of EACC to KO, misdiagnosis is possible. Temporal bone imaging should be obtained prior to attempts at debridement of suspected EACC. Increased awareness of these uncommon conditions is warranted to prompt appropriate investigation and prevent iatrogenic complications such as facial nerve injury.