A sebaceous cyst is a sac under the skin that is enclosed in a lining. This lining is similar to the topmost portion of a hair follicle and contains a fatty white, partially solid matter referred to as sebum. Sebum is generated by sebaceous glands of the epidermis. The surface of the skin, or epidermis, comprises of a very thin, safeguarding layer of cells that your body constantly sloughs off. The majority of epidermoid cysts develop when these cells, rather than shedding as usual, travel deeper into the skin and proliferate. Usually, this happens in parts where there are tiny hair follicles and bigger sebaceous glands, like on the face, neck, groin and upper back. The epidermal cells make up the walls of sebaceous cysts, and then emit the protein keratin into the inner areas. The keratin is the thick yellow matter that occasionally draws off the cyst.