We reviewed the cases of eighty-one patients with pigmented villonodular synovitis and giant-cell tumor of the tendon sheath. The average duration of symptoms prior to consulting a physician was twenty-seven months. The lesion was slow-growing, was located in one joint or tendon sheath, and usually was asymptomatic in a finger or thumb but painful in a knee or toe. Twenty-nine per cent of the finger or thumb lesions and 21 per cent of the knee lesions that were followed recurred. Approximately 70 per cent of the radiographs showed abnormalities that ranged from soft-tissue swelling to bone erosion. Six lesions were incidental findings during arthrotomy for some other lesion. The histological characteristics of the solitary nodular, multiple nodular, and diffuse lesions suggested that they have a common histogenesis that is characterized by proliferation of fibroblastic or histiocytic mesenchymal cells, or both, beneath the synovial or tenosynovial lining cells, and by collagen production. Foam cells and iron deposits appear to be secondary changes and are usually seen in the periphery of the expanding nodules. The centrifugal growth pattern and the distinct differences between the lesional tissue and the adjacent hyperplastic synovial tissue suggest that pigmented villonodular synovitis is a true neoplastic process.