This paper undertakes the study of multidimensional finite impulse response (FIR) filterbanks. One way to design a filterbank is to factorize its polyphase matrices in terms of elementary building blocks that are fully parameterized. Factorization of one-dimensional (1-D) paraunitary (PU) filterbanks has been successfully accomplished, but its generalization to the multidimensional case has been an open problem. In this paper, a complete factorization for multichannel, two-dimensional (2-D), FIR PU filterbanks is presented. This factorization is based on considering a two-variable FIR PU matrix as a polynomial in one variable whose coefficients are matrices with entries from the ring of polynomials in the other variable. This representation allows the polyphase matrix to be treated as a one-variable matrix polynomial. To perform the factorization, the definition of paraunitariness is generalized to the ring of polynomials. In addition, a new degree-one building block in the ring setting is defined. This results in a building block that generates all two-variable FIR PU matrices. A similar approach is taken for PU matrices with higher dimensions. However, only a first-level factorization is always possible in such cases. Further factorization depends on the structure of the factors obtained in the first level.