Cholesteatoma is a benign collection of keratinizing squamous epithelium in the middle ear in form of a cyst. Cholesteatoma is pathophysiologically divided into congenital and acquired. Congenital cholesteatoma is specific to childhood and appears as a whitish cystic mass formed during embryogenesis behind intact eardrum without history of middle ear inflammation or medical intervention. Acquired cholesteatoma forms after birth and originates from the entrance of keratinizing epithelium from retraction pocket or damaged tympanic membrane. Symptoms of cholesteatoma are: conductive hearing loss, otalgia, otorrhea, headache, dizziness and vomiting. Cholesteatoma usually grows asymptomatically for years before onset of symptoms, which makes early detection difficult. If left untreated, it can become dangerously large and cause number of intracranial and extracranial complications. Diagnosis of cholesteatoma is based on clinical examination or solely on otoscopic exam of tympanic membrane with emphasis on attic and posterosuperior quadrant. Radiological examination includes Computed tomography, as the primary imaging technique, and Magnetic resonance imaging. Tuning fork tests and audiometric testing like tympanometry and audiometry are used to detect hearing deficiency which is most often conductive. The treatment of cholesteatoma is surgical with aim of complete removal of cholesteatomatous tissue and restoration of middle ear functions. The follow-up is imperative to determine the course of the disease and detect recidivism.