We tested the hypothesis that extensively keratinized squamous intraepithelial lesions (SILs) are difficult to grade precisely by identifying 100 Papanicolaou smears with a keratinizing SIL that had been originally judged difficult to grade. Of these, 65 were confirmed as low-grade SIL (LSIL) or high-grade SIL (HSIL) on subsequent biopsy. The 65 smears were reviewed independently by 3 cytopathologists who graded each case as LSIL or HSIL (by Bethesda System criteria). The accuracy of the grade was determined by the subsequent biopsy results; accuracy was compared with that of a historic control group of SILs with biopsy follow-up. In the study group, biopsies showed LSIL in 41 cases and HSIL in 24. The mean accuracy for a smear diagnosis of LSIL was 60% for the study group and 92% for the control group. For a smear diagnosis of HSIL, the accuracy was 60% for the study group and 95% for the control group. The overall kappa value for the study group confirmed poor interobserver agreement. Some keratinizing SILs are difficult if not impossible to grade precisely using standard criteria. For such lesions, the diagnosis "SIL, grade cannot be determined due to extensive keratinization" is justified.