Colloid cysts of the third ventricle are rare, accounting for less than 1% of all intracranial neoplasms. However, its incidence will increase with increased use of CT scan and MRI. The symptomatology is principally acute or chronic hydrocephalus obstructing the foramen of Monro, and the origin of this cyst is controversial, neuroepithelial or endodermal. We report a case of colloid cyst of the third ventricle, associated with cavum veli interpositi. The patient, a 46-years-old female, had suffered from headache, ataxic gait and tremor lasting 6 months. CT scan and homogenous high signal intensity by SR (2450/450) MR image, detected a small round mass in the anterior part of the third ventricle that was of homogenous high density, but without the effect of enhancement. The lateral ventricle was markedly dilated, and a large cavum veli interpositi was found between the third ventricle and the corpus callosum. The cyst was totally removed by transventricular approach, and the result was satisfactory. We reviewed literatures and discussed MRI findings of colloid cysts of the third ventricle. Because of the presence of microvilli covered with coating materials seen in electron microscopic study, we suggested that the colloid cyst was endodermal in origin.