Benign and malignant papillary lesions of the breast can be difficult to distinguish in both cytologic and histologic preparations. To determine the cytologic features, we retrospectively analyzed 29 fine needle aspirates with a biopsy-confirmed diagnosis of papilloma or papillary carcinoma. They included 7 intracystic papillary carcinomas, 6 invasive papillary carcinomas and 17 intraductal papillomas. All cases were evaluated for cellularity, single epithelial cells, atypia and papillary fragments. A common pattern was increased cellularity, papillary groups and single columnar epithelial cells. Markedly increased cellularity was present in 10/12 carcinomas and 4/17 papillomas. Numerous single cells were present in 5/12 carcinomas and 2/17 papillomas. The majority of cases had only mild to moderate atypia. Papillary carcinomas displayed nuclear hyperchromasia and stratification surrounding stroma and in isolated clusters. In papillomas, nine cases had background apocrine metaplasia, foam cells and/or bipolar cells. Apocrine metaplasia was absent from all cases of papillary carcinoma. Two papillomas had marked nuclear atypia with background necrosis and inflammation. These unusual cases represented infarcted papillomas, a potential pitfall in the diagnosis of cancer. We conclude that markedly increased cellularity and numerous single cells favor a diagnosis of papillary carcinoma. More specific diagnostic clues are the cytologic findings of nuclear hyperchromasia, stratification and absence of benign background cells, such as apocrine metaplasia.