Teratomas of the ovary and testis are confusing because, despite histologic similarities, they exhibit different biologic behaviors, depending mostly on the site of occurrence and the age of the patient. Thus, most ovarian teratomas are benign, and most testicular teratomas are malignant, with the exception of those occurring in children. These general statements, however, do not hold true for ovarian teratomas that are "immature" or exhibit "malignant transformation" and for dermoid and epidermoid cysts of the testis, categories of ovarian and testicular teratomas that are malignant and benign, respectively. This review concentrates on some of the "newer" observations concerning these interesting and confusing neoplasms, including diagnostically deceptive patterns. It is the author's opinion that much of the confusion regarding gonadal teratomas can be clarified by the concept that the usual ovarian teratoma derives from a benign germ cell in a parthenogenetic-like fashion, whereas the typical postpubertal testicular example derives from a malignant germ cell, mostly after evolution of that originally malignant cell to an invasive germ cell tumor (ie, embryonal carcinoma, yolk sac tumor, etc). The postpubertal testicular teratomas can therefore be thought of as an end-stage pattern of differentiation of a malignant germ cell tumor. The pediatric testicular teratomas, as well as dermoid and epidermoid cysts of the testis, however, must derive from benign germ cells, in a fashion similar to most ovarian teratomas. The teratomatous components of mixed germ cell tumors of the ovary, on the other hand, likely have a pathogenesis similar to that of postpubertal testicular teratomas.