The advent of antibiotics has not reduced the incidence of cholesteatoma resulting from chronic otitis media. This incidence remains high due to continued Eustachian tube problems and to other poorly understood mechanisms. Because the otologist will continue to encounter cholesteatoma in clinical practice, he should be prepared to judge the extent and severity of disease and its potential for complications based on the initial office examination. This judgment is best accomplished through an understanding of the anatomy and embryology of the middle ear cleft—the compartments which encourage growth of cholesteatoma and the membranes which limit its growth. This paper reviews the anatomy and embryology of the compartments of the middle ear cleft in an attempt to understand the pathogenesis of cholesteatoma and its potential for complication.