Nine examples of mammary adenoid cystic carcinoma with sebaceous differentiation were studied. Each one of the nine tumors contained basaloid, eosinophilic, and sebaceous cells. Two of these tumors were examined by electron microscopy and compared with four mammary adenoid cystic carcinomas without sebaceous differentiation. The sebaceous cells were similar to normal adnexal sebaceous cells. The eosinophilic cells reflected adenosquamous differentiation and were identical to superficial cells of eccrine sweat ducts. The basaloid cells showed no distinctive cytoplasmic differentiation. Cells with features between the basaloid, sebaceous, and adenosquamous cells were present, indicating that basaloid cells have the potential to differentiate toward skin adnexal structures giving rise to both sebaceous and adenosquamous cells. Myoepithelial cells were not identified in any of the six tumors evaluated by electron microscopy.