Cholesteatoma is a common benign lesion of the middle ear characterised by accumulation of keratinous debris. It is associated with local bony erosions and hence serious intracranial and labyrinthine complications which prompts surgical intervention. Earlier, High resolution computed tomography (HRCT) was used in combination with clinical examination to arrive at a diagnosis. Computed tomography (CT) gives excellent definition of bony structures, but lacks sensitivity in differentiating between various causes of soft tissue densities. Magnetic resonance imaging (MRI) is more useful in evaluation of soft tissue details. We conducted this study with an aim of evaluating the role of diffusion weighted imaging in diagnosis of cholesteatoma and its utility to differentiate cholesteatoma from granulation/ inflammatory tissue. The study was conducted on forty patients between March 2018 and February 2019 who were clinically suspected of chronic suppurative otitis media with cholesteatoma. These patients were subjected to HRCT and Diffusion weighted MRI (DW-MRI) examination of temporal region and findings were correlated with intraoperative and histological features. Our study found that, HRCT had a sensitivity of 83.3% and specificity of 58.3% in detection of cholesteatoma, while MRI was found to accurately predict the presence of cholesteatoma in 91.6% of the cases evaluated. The sensitivity, specificity, positive predictive value and negative predictive value were 91.6%, 91.6%, 95.6% and 84.6%, respectively. Hence, we conclude that diffusion weighted magnetic resonance imaging is a useful technique for cholesteatoma imaging with high sensitivity and specificity. Combination of HRCT and MRI will be helpful to make an accurate diagnosis.