To describe the relevant morphologic features and to create a simple diagnostic method for pigmented basal cell carcinoma (BCC) using in vivo cutaneous surface microscopy (ie, dermoscopy, dermatoscopy, or oil epiluminescence microscopy). Pigmented skin lesions were photographed in vivo using immersion oil (surface microscopy). All pigmented skin lesions were excised and reviewed for histological diagnosis. Photographs of 142 pigmented BCCs, 142 invasive melanomas, and 142 benign pigmented skin lesions were randomly divided into 2 equally sized training and test sets. Images from the training set were scored for 45 surface microscopy features. From this a model was derived and tested on the independent test set. All patients were recruited from the primary case and referral centers of the Sydney Melanoma Unit, Sydney, Australia, and the Skin and Cancer Unit, Skin and Cancer Associates, Plantation, Fla. A random sample (selected from a larger database) of patients whose lesions were excised. Sensitivity and specificity of the model for diagnosis of pigmented BCCs. The following model was created. For a pigmented BCC to be diagnosed it must not have the negative feature of a pigment network and must have 1 or more of the following 6 positive features: large gray-blue ovoid nests, multiple gray-blue globules, maple leaflike areas, spoke wheel areas, ulceration, and arborizing "treelike" telangiectasia. On an independent test set the model had a sensitivity of 97% for the diagnosis of pigmented BCCs and a specificity of 93% for the invasive melanoma set and 92% for the benign pigmented skin lesion set. A robust surface microscopy method is described that allows the diagnosis of pigmented BCCs from invasive melanomas and benign pigmented skin lesions. Arch Dermatol. 2000;136:1012-1016