Cutaneous biopsy specimens from 22 patients showed the distinctive histopathologic pattern of necrobiotic xanthogranuloma within the dermis or subcutaneous tissue (or both). Twenty of the 22 patients had 1 or more serum protein abnormalities, consisting of an IgG monoclonal protein in 16, multiple myeloma in 3, cryoglobulinemia in 3, and an abnormal serum protein electrophoresis in 1. Cutaneous lesions were seen as discrete, slowly developing red nodules and plaques with a xanthomatized hue and a predilection for the face (periorbital region in particular), trunk, and extremities. Ulceration was a notable finding in 10 patients. Histologically, the dermis and lobules of subcutaneous tissue were involved with a granulomatous infiltrate containing bands of hyaline necrobiosis and bizarre foreign body, as well as Touton giant cells. Cholesterol clefts, lymphoid nodules with or without germinal centers, and foci of plasma cells were variable but significant features. Leukocyte monoclonal antibody studies in 6 patients demonstrated helper T cells within the granulomas. Electron microscopy in 3 cases showed lipid vacuoles in macrophages in the dermis and dendritic cells in the epidermis, and study confirmed this entity as a non-X histiocytosis. Pertinent laboratory findings, in addition to the serum protein abnormalities, included elevation of the erythrocyte sedimentation rate, leukopenia with absolute neutropenia, and decreased serum complement levels, as well as decreased levels of C1-esterase inhibitor in some patients. Thirteen of the 22 patients have survived, the mean duration being 9.5 years after the onset of cutaneous disease. While given to only a few patients in the current series, low-dose chemotherapy seems to induce a favorable response in both the cutaneous and the hematologic disease.