The inner wall of the cyst is stratified squamous epithelium and the cyst is filled with the exfoliated and necrotic epithelium, and keratinizator, etc. There exists cholesteral crystal, hence the name cholesteatoma. Cholesteatoma grows fast and can develop into a large one quickly which will compress the tissue around it. Meantime, the multiple protein decomposition enzyme produced by the inflammatory granulation tissue of the matrix and under the matrix damages the surrounding substance of bone.

Once the bone wall is damaged, inflammation will spread, causing a series of cranial complications. The disease also pertains to the category of "Nong'er" (otitis media suppurativa) in TCM. TCM believes the repeated occurrence of acute suppurative otitis may cause the retention of pathogenic factors and consume qi and yin, consequently giving rise to prolonged pyorrhea inside the ear.