A 4-year-old boy had three neuroepithelial cysts, one in the third ventricle and two in the supratentorial subarachnoid space, and also had stenosis of the cerebral aqueduct, obstructive internal hydrocephalus, frontoethmoidal meningoencephalocele, and right microphthalmia. The occurence of these combined lesions supports the congenitially derived nature of the cysts. The cysts originated from neuroepithelium including ectopic ependyma-lined structures. The exception may be those cysts arising in or near the floor of the third ventricle; these cysts could be derived from the cleft of Rathke's pouch, an endodermal derivative. Folding of the neuroepithelium in contact with mesenchyma or neuroglial tissue is proposed as the mode of formation of most "colloid" cysts. Review of the literature as well as our experience indicates that neuroepithelial cysts are widely distributed throughout the central nervous system.