Canal cholesteatoma is a rarity in otologic pathology, often leading to misdiagnosis as external otitis or otomycosis by physicians unfamiliar with the disease. It presents typically with otorrhea, focal erosion and keratin accumulation in the osseous ear canal and has to be distinguished from keratosis obturans, which leads to otalgia and bilateral conductive hearing loss by ceruminal plugs, with circumferential distention of the ear canal. Treatment by canaloplasty is curative and highly successful. Alternative conservative treatment is feasible, however, requiring long-term follow up, with often painful cleaning of the lesion.