When examined at scanning magnification of a conventional microscope, proliferating tricholemmal cystic carcinoma is seen to be a mostly solid neoplasm that may be sharply circumscribed with a smooth border along the circumference of it or may display a jagged margin in foci. Fibrous tissue that encircles the neoplasm often is compressed and separated by clefts from adjacent normal dermis or subcutaneous fat. Within the neoplasm are cystic zones that, by assessment grossly and microscopically, impart a honeycomb appearance to it. At higher magnification, those numerous cystic structures are seen to consist of epithelium just like that of the isthmus of a normal follicle and of the lower segment of a normal follicle well advanced in catagen. Epithelium with the same appearance also lines what is known conventionally as a tricholemmal cyst and by us as an isthmic-catagen cyst (in keeping with our method of naming cysts according to the normal epithelial structure of adnexa that the lining of the cyst resembles most closely). Aggregations of proliferating tricholemmal cystic carcinoma are characterized by a basal layer, a "spinous" zone in which intercellular bridges are not discernible readily between cells that sport abundant pink cytoplasm, no granular zone, and orthokeratotic corneocytes arranged compactly. That type of cornification, referred to often, but imprecisely, as tricholemmal keratinization, specifies maturation of basal keratinocytes of the outer sheath at the isthmus, a site where the outer sheath is able to cornify unfettered because the rigid fully cornified inner sheath has desquamated and, consequently, no longer can impede cornification from occuring freely. The term "tricholemmal keratinization" is flawed because the tricholemmal sheath is present not only at the isthmus of a follicle, but at the stem and bulb as well, and, moreover, the "keratinization" actually is cornification.

The neoplasm under discussion here can be identified as malignant for reasons that pertain both to architectural pattern and to cytopathologic attributes, the former being asymmetry, jagged outline of the periphery of the neoplasm in some foci often, variation markedly in size and shape of aggregations of neoplastic cells, and confluence of aggregations, and the latter being crowding of pleomorphic nuclei, seen especially at the periphery of aggreagations, some nuclei at times being large, and mitotic figures being present and even numerous, some of those figures sometimes being abnormal. The neoplasm is a carcinoma because cells that compose it are cohesive, and it is follicular fundamentally because differentiation is toward outer sheath at the isthmus.

For several reasons, proliferating tricholemmal cystic carcinoma commonly is misinterpreted histopathologically as a cyst or a benign neoplasm. At scanning magnification, the mass of epithelial cells often is observed to be extraordinarily well circumscribed, to display a remarkably smooth margin, and to be punctuated by extensive calcification of cornified elements, as often is the case in an isthmic-catagen cyst. The aggregations themselves usually are sharply marginated and their border tends to be smooth. At higher magnification, nuclei of neoplastic cells that reside at some distance from the periphery of aggregations are small and monomorphous; none of those nuclei are in mitosis. It cannot be a cyst, however, because it is not merely an epithelium-lined sac that contains cells, and it cannot be a benign neoplasm for reasons that pertain to silhouette and to cytopathologic characteristics, to say nothing of biologic behavior—it has capability for metastasis and sometimes exercises that potential.

What we now term proliferating tricholemmal cystic carcinoma corresponds to published photomicrographs and descriptions of proliferating tricholemmal cyst and numerous synonyms given to it.

On the basis of our experience with a single specimen, we also recognize a rare benign analogue of proliferating tricholemmal cystic carcinoma, namely, proliferating tricholemmal cystic acanthoma.