The standard treatment for acquired cholesteatoma involves surgical removal of the lesion and reconstruction of the tympanic membrane. In some children, these lesions can be treated more conservatively. We conducted a retrospective study of 29 ears in 24 children who had been treated for early acquired cholesteatoma with mechanical reduction and a tympanostomy tube. Outcomes measures included hearing status, the postoperative appearance of the tympanic membrane, and the need for additional surgery. We found that anterior and inferior pars tensa lesions, with or without squamous debris, can be successfully reduced, but that posterosuperior retractions respond less well when the ossicular chain has been eroded. None of the children who responded to mechanical reduction required major reconstructive surgery later. We conclude that mechanical reduction of retraction pocket cholesteatomas with tympanostomy tube placement is sufficient to restore normal hearing and a normal tympanic membrane appearance in selected children with early lesions. We also identified several important prognostic features, including the patient's age, the specific location of the retraction pocket on the tympanic membrane, the extent of the pocket, ossicular chain involvement, and the patient's adenoid status.