The clinical and pathologic features of 50 subcutaneous dermoid cysts were analyzed. The lesions were usually noted at birth and occurred along lines of embryonic fusion. Forty-one cysts were located in the region of the head, mainly about the eyes; nine were in the neck. Pilar elements were found in all 50 cysts, sebaceous glands in 48, eccrine glands in 18, apocrine glands in 9, keratinizing epithelium in 48, and smooth muscle fibers in 13. Subcutaneous dermoids may be the result of the sequestration of cutaneous tissues along lines of embryonic closure. They should be distinguished from other types of cutaneous and subcutaneous cysts and from the more complex ovarian "dermoids." The latter are benign cystic teratomas and contain structures not normally found in skin.