Ependymal cell rests of the sacrococcygeal area are relatively common; they may occur in association with postcoccygeal (pilonidal) dimples or in the absence of observable abnormalities. Some of the lesions are poorly organized, whereas others closely resemble minute myxopapillary ependymomas. Most authorities believe that the majority of subcutaneous sacrococcygeal myxopapillary ependymomas arise in ependymal cell rests. Myxopapillary ependymomas may be locally aggressive and may metastasize, whereas ependymal rests are biologically indolent. We studied cutaneous ependymal rests of the sacrococcygeal region in four children to compare them with myxopapillary ependymomas of this anatomic site. All lesions were small (less than 0.5 cm) and were discovered incidentally in tissue from surgically corrected pilonidal sinuses. In no case was a mass lesion observed either clinically or upon gross examination of the excised specimen. Microscopically, the lesions consisted of clusters of ependymal cells near the junction of dermis and subcutis. Central vascular channels were surrounded by myxomatous material and rows of cuboidal cells, mimicking patterns seen in myxopapillary ependymomas. They differed from ependymomas in that they lacked characteristics associated with neoplasia--expansile, infiltrative, and destructive properties. Careful attention to histologic detail allows distinction of these lesions, which, though related, differ significantly in terms of prognosis.