Bladder granulomata were found in 17 (3%) of 539 patients who had bladder biopsy or resection. The finding of granulomata in 13.6% of patients who had at least two surgical procedures, but never in the first biopsy specimen of any patient was highly significant statistically (P much less than 0.001). The occurrence of granulomata exclusively in patients with bladder carcinoma was related to the significantly greater number of biopsies performed in these patients and not to carcinoma, per se. There were two types of granulomata: necrotizing, palisading granulomata (NPG) resembling rheumatoid granulomata; and foreign-body-type granulomata (FBG). They often occurred together in the same specimen, and transitions from FBG to NPG were evident histologically. The granulomata apparently healed by fibrous scarring. Energy-dispersive analysis of x-rays (EDAX) did not reveal any inorganic foreign material, but showed sulphur in some granulomata, possibly released from necrotic stroma and urothelium. Clinical and morphologic evidence is presented indicating that the granulomata arose as a local reaction to tissue necrosis caused by surgery and/or cautery.