DWI has proved to be valuable in detection of cholesteatoma, but there still remain challenges. Susceptibility artifacts and geometric distortions in single-shot EPI DWI affect the identification of subtle nidus. TSE-based DWI can reduce susceptibility-induced artifacts, but the disadvantages are SNR degradation and T2-blurring. In this work, point-spread-function (PSF) encoded EPI DWI was employed to overcome the aforementioned limitations for cholesteatomas detection. This technique has the capability to acquire high-quality, distortion- and blurring-free diffusion images with more accurate lesion boundary.