OBJECTIVES: Subareolar tissue is examined during nipple-sparing mastectomy (NSM) to minimize the risk of occult malignancy within the preserved nipple. A positive subareolar tissue biopsy typically warrants subsequent nipple excision. We study the factors associated with a positive subareolar tissue biopsy, the rate of residual malignancy in subsequent nipple excisions, and the value of subareolar tissue biopsy intraoperative frozen section (IOF). METHODS: We identified 1,026 consecutive NSMs with separately submitted subareolar tissue biopsies over a 5.5-year period. Clinicopathologic data were reviewed. We examined concordance rates between subareolar tissue biopsy and subsequent nipple excisions as well as IOF diagnosis and permanent control diagnosis. RESULTS: Among cases of therapeutic NSM, the rate of a positive subareolar tissue biopsy was 7.2%. Multifocal/multicentric disease (P = .0005), presence of lymphovascular invasion (P = .033), and nodal involvement (P = .006) were significantly associated with a positive subareolar tissue biopsy. Thirty-nine of 41 cases with positive subareolar biopsies underwent subsequent nipple excision, with 20 (51%) showing residual carcinoma. Among all IOF samples, 9 (3.3%) showed a discrepancy between the IOF and permanent diagnoses, mostly because of false-negatives. CONCLUSIONS: A positive subareolar tissue biopsy predicts residual carcinoma in the excised nipples in 51% of cases. IOF is accurate and reliable.