Cholesterol granuloma of the orbital bones is a rare but readily recognizable clinical and radiologic entity usually affecting men. Twenty-seven patients are reported, and in all except one, the frontal bone in the region of the lacrimal fossa was involved. These lesions produced an area of osteolysis in the frontal bone with expansion into the extraperiosteal space of the lacrimal fossa, causing fullness of the upper lid and proptosis. The granuloma always remained extraperiosteal and was composed of a granulomatous reaction surrounding cholesterol crystals and altered blood. It is postulated that cholesterol granuloma occurs because of hemorrhage into the diploe of the bone. Extraperiosteal surgical removal cured all patients. Some previous reports have failed to identify the true nature of this lesion and confused its nomenclature.