We report the case of a patient who came to us for evaluation of a progressive unilateral hearing loss and who was found to have a sebaceous nevus in an unusual location: the external auditory canal. A sebaceous nevus is a congenital organoid mass that occurs primarily on the face, scalp, and periauricular regions. Despite the predilection of sebaceous nevi for the head and neck, reports of this lesion rarely appear in the otolaryngology literature. Left untreated, the lesion can progress through three stages of gross and histopathologic development; a sebaceous nevus begins as a small benign papule, grows into an enlarging mass with different characteristics, and ultimately becomes a secondary neoplasm. The lesion's potential for malignant transformation and its association with syndromes underscores the importance of prompt recognition and appropriate management. This case report adds the sebaceous nevus to the differential diagnosis of external auditory canal lesions and provides essential information about this rare mass.