Magnetic resonance imaging with gadolinium facilitates the early diagnosis of internal auditory canal tumors at a small enough stage to permit increasing application of hearing preservation surgical techniques. Surgeons report successful removal of tumors as small as 3 mm, which are diagnosed with enhanced magnetic resonance imaging. A retrospective study was performed to determine the risk of false-positive "tumor" diagnosis with enhanced magnetic resonance imaging. We reviewed the imaging records, office notes, and surgical records of 112 consecutive "tumors" involving the internal auditory canal treated by the Wilford Hall USAF Medical Center Neurotology Service between July 1991 and July 1994. Two categories of false-positive magnetic resonance imaging were identified: (1) surgically confirmed absence of internal auditory canal neoplasm and (2) spontaneous resolution of the internal auditory canal lesions on subsequent, enhanced magnetic resonance images. Overall, eight false-positive scans were identified. Three were surgically confirmed as false-positive, and five resolved on subsequent imaging studies. All cases were smaller than 6 mm and involved the distal internal auditory canal (fundus). The surgically confirmed cases were approached through a middle fossa technique with successful hearing preservation. The overall rate of surgical false-positive results was 3.5% (3 cases in 86 surgeries). However, the overall false-positive rate for intracanalicular "tumors" was 32% (8 cases in 25 intracanalicular lesions). Although hearing preservation is more likely in small lesions, the surgeon must consider the possibility that an internal auditory canal lesion smaller than 6 mm may actually represent a nonneoplastic process. Enhancing lesions limited to the internal auditory canal fundus may be treated by reimaging the patient in 6 months after the first image rather than by prompt surgical exploration. (OTOLARYNGOL HEAD NECK SURG 1995;113:61-70.)