Necrobiotic xanthogranuloma of the skin is associated with paraproteinemia and, often, with plasma proliferative disorders, including multiple myeloma. Other commonly recognized systemic abnormalities include hepatosplenomegaly, a highly increased erythrocyte sedimentation rate, and leukopenia. Fifteen of 16 patients (seven men and nine women with a mean age of 54 years) with this condition had ophthalmic manifestations. Thirteen patients had lesions affecting the skin of the eyelids and periorbital tissue; on casual examination these lesions resembled plane xanthoma. Unlike plane xanthoma, however, the lesions of necrobiotic xanthogranuloma were almost always indurated. Further, the lesions frequently became inflamed, leading to superficial ulceration. Deeper lesions occasionally involved the orbit. Yellow lesions were sometimes visible in the episcleral tissues where they were associated with recurrent symptoms of scleritis and episcleritis. Biopsy specimens of the skin lesions disclosed a distinctive pattern of subepidermal granulomatous masses with focal aggregates of histiocytes and giant cells surrounded by hyaline necrobiosis. Surgical excision of the eyelid lesions was often followed by recurrence and increased activity of the lesions. Low-dose chemotherapy is likely to produce a favorable response, with regard to both the skin lesions and the paraprotein abnormalities.