Cutaneous marginal zone lymphoma (MZL) is a recently described low-grade B-cell lymphoma that usually follows an indolent course. This tumor shares many histologic and clinical features with cutaneous lymphoid hyperplasia (CLH), a benign reactive lymphoid proliferation. Sixteen biopsy specimens from 14 patients with CLH were studied, and compared with 16 cases of cutaneous MZL (9 primary cutaneous, 7 with secondary involvement of the skin) to determine whether there were features that would permit their distinction on routinely fixed, paraffin-embedded tissue sections. Both disorders showed a female preponderance (CLH: 9 F, 5 M; MZL: 11 F, 5 M). The median age was also similar (CLH: 54 years; cutaneous MZL: 55 years). CLH was most common on the arm (8) and the head and neck (7) but also involved the trunk (1); primary cutaneous MZL most often involved the limbs (3), trunk (3), and head and neck (3). Lymphoma did not develop in any of the 14 CLH patients (follow-up ranging from 9 to 246 months, mean 62 months). Six of 9 patients with primary cutaneous MZL and all 7 patients with secondary cutaneous MZL experienced relapses, most commonly isolated to skin or a subcutaneous site. On hematoxylin-eosin stained sections, a diffuse proliferation of marginal zone cells (p < 0.0001), zones of plasma cells (p = 0.01), the absence of epidermal change (p = 0.01), reactive germinal centers (p = 0.03), and a diffuse pattern of dermal or subcutaneous infiltration (p = 0.03) were more often seen in cutaneous MZL. A dense lymphocytic infiltrate, bottom-heavy or top-heavy growth pattern, eosinophils, and a grenz zone were seen equally often in both disorders. Dutcher bodies were observed only in cutaneous MZL. Immunoperoxidase stains on formalin-fixed paraffin-embedded tissue sections showed monotypic expression of immunoglobulin light chains by plasma cells in 11 of 16 MZL cases. By definition, no case with monotypic plasma cells was diagnosed as CLH. In CLH, T cells usually outnumbered B cells, and a B:T cell ratio > or = 3:1 was not observed in any case. By contrast, 40% of the MZL cases showed a B:T cell ratio > or = 3:1. No coexpression of CD20 and CD43 was seen in any case of either MZL or CLH. In summary, the clinical presentations of CLH and MZL are similar. In contrast to historical criteria for diagnosing cutaneous lymphoid infiltrates, the presence of reactive follicles favors a diagnosis of cutaneous B-cell lymphoma (CBCL). In addition, a bottom-heavy or top-heavy growth pattern is not a distinctive finding. Marginal zone cells and zones or sheets of plasma cells are strong morphologic indicators of marginal zone lymphoma. The diagnosis of CBCL can be supported in 40% of the cases by demonstrating a B:T cell ratio of > or = 3:1, and confirmed in 70% of the cases by demonstrating monotypic light chain expression of plasma cells on paraffin sections.