Background: Cholesteatoma is a sac containing keratin debris surrounded by keratinized squamous epithelium with bone-eroding properties. Secondary cholesteatoma is the commonest type of cholesteatoma. Middle ear cleft cholesterol granulomas (CG) usually present with middle ear effusion and features of diffuse mastoid disease. Hemorrhage, drainage obstruction, and impaired ventilation precipitate CG formation. The latter two factors also contribute to the pathogenesis of chronic otitis media (COM) and cholesteatoma, often leading to their coexistence. CGs are rarely aggressive and are encased by thick fibrous tissue with bone-eroding capabilities. However, differentiation of a cholesteatoma from a CG based on computerized tomography (CT) is difficult and necessitates magnetic resonance imaging. Case description: We report a rare case of a secondary cholesteatoma with a coexistent erosive tympanomastoid CG causing erosion of the basal turn of the cochlea but with an intact scutum, thereby presenting a diagnostic challenge. Conclusion: Evidence of bone erosion on a computerized tomogram in patients with COM does not indicate the mere presence of a cholesteatoma. A differential diagnosis which includes other erosive conditions such as glomus tympanicum, CG, etc., which can coexist with a cholesteatoma, should be considered and investigated accordingly in order to plan its surgical treatment.