A dermoid cyst is a congenital choristoma of the orbit. A choristoma is a benign tumor consisting of histologically normal cells occurring in an abnormal location. Dermoid cysts consist of keratinized epithelium and adnexal structures such as hair follicles, sweat glands, and sebaceous glands. They slowly enlarge with age. Dermoid cysts are often cited as one of the most common orbital tumors in children, accounting for 46% of childhood orbital neoplasms.  They make up 3-9% of all orbital masses.
When fetal suture lines close during embryogenesis, embryonic epithelial nests may become entrapped and form a cyst.  The most commonly involved suture is the frontozygomatic suture, although they may also occur at the frontoethmoidal or frontomaxillary sutures.
Dermoid cysts are composed of keratinized stratified squamous epithelium with dermal appendages and adnexal structures, including hair follicles, sebaceous glands, sweat glands, smooth muscle, and fibroadipose tissue. The lumen contains keratin and hair. Cysts that are only lined with epithelium without adnexal elements are termed epidermoid cysts. 
Patients with superficial dermoids are usually children presenting with a slowly progressive, nontender mass near the lateral eyebrow.
Older children and adults may present with diplopia or proptosis.
A superficial cyst usually presents as a smooth, painless mass in the superotemporal quadrant, but it may also be found in the superonasal quadrant. It may appear mobile or affixed to bone. If the cyst leaks or ruptures with extrusion of oil and keratin into adjacent tissues, granulomatous inflammation may be present.  They are more common than deep cysts and usually become apparently during the first decade of life. If large, they may cause mechanical ptosis.
Deeper orbital cysts may be partially palpable or non-palpable. They are usually diagnosed in older children or adults. Deep cysts may cause progressive proptosis or diplopia.
• Palpable mass • Ptosis • Proptosis • Pulsating proptosis with mastication • Globe displacement • Restriction in extraocular movements • Inflammation • Orbitocutaneous Fistula
Dermoids, especially if superficial, may be diagnosed through physical exam.
If a deeper cyst is suspected, a computed tomography is indicated. It is described as a well-circumscribed lesion with a hyperdense wall and hypodense contents. Bony remodeling is present in 85% of cases.  Computed tomography can also rule out a dumbbell configuration, with part of the lesion in the orbit and part in the temporal fossa, connected through a bony defect at the suture line.
Medial lesions in infants may be confused with congenital encephaloceles, dacryoceles, and mucoceles. Differential diagnosis of lateral lesions includes lacrimal tumors.
Small, asymptomatic cysts may not require treatment. They may stabilize or even decrease in size over years. However, some surgeons opt for early excision to avoid the risk of traumatic rupture in the future. 
The mainstay of treatment is surgical. For superficial lesions, an incision in the upper eyelid crease or directly over the lesion is often used. For deep lesions, anterior, lateral, or combined orbitotomy is indicated. If possible, the surgeon attempts to remove the cyst in total without rupture. 
If the cyst ruptures during surgery, a lipogranulomatous inflammatory reaction may occur. This can be mitigated by copious irrigation at the time of surgery. Cysts extending through bony sutures often cannot be removed without rupture.  If incompletely removed, cysts may recur or lead to abscess formation. They inflammation from remaining dermoid tissue may also result in an orbitocutaneous fistula.
Prognosis is excellent following successful early surgical intervention.
- Basic Clinical and Science Course. Pediatric Ophthalmology and Strabismus. 2013-14. Section 6 pg 343-344.