1. Tumors of the external auditory canal region were produced by oral administration of 2-acetylaminofluorene in 71 rats out of 124 which survived a 6 month period of administration of the compound. In 12 animals the tumors were bilateral. Tumors in other locations, such as the liver, breast, etc., were less frequent. 2. Tumors were found to originate in the compound sebaceous gland located at the medial end of the external auditory canal. 3. Histologically the tumors were sebaceous or keratinizing squamous-cell carcinomas. 4. The tumors were found to arise in cystic lobules of the gland, produced by stasis of secretion. 5. Cystic lesions of the sebaceous glands appear to be a frequent condition in older rats. The outward bulging of the tympanic membrane with interference in drainage from the gland seems to be a promoting factor in the stasis of sebum. 6. The localizing effect of the preexisting cystic lesions in the sebaceous glands on the carcinogenic action of 2-acetylaminofluorene is discussed.