MOST AUTHORITIES now agree that the ubiquitous basal cell epithelioma is derived not from basal epidermal cells which are the parents of prickle cells but from specialized epidermal cell rests which are the potential progenitors of skin appendages. Complicated classifications of basal cell tumors based upon the degree and type of cellular differentiation are intriguing, but of questionable practical significance. Numerous investigators, particularly among the British, have demonstrated little correlation between histological features and clinical behavior or radiosensitivity. Of greater importance is the differentiation of basal cell epithelioma from prickle cell carcinoma. Histological identification usually can be accomplished without equivocation, but on occasion this may be difficult, and basal cell epitheliomas which exhibit marked fibrosis are prone to cause such difficulties. The presence of desmoplasia in recurrent or irradiated basal cell epitheliomas is well known, but its occurrence in untreated tumors has received little attention.