Background: To evaluate the effectiveness and safety of USG–guided percutaneous ethanol injection (PEI) in cystic thyroid nodules. Patient and method:This was a prospective conducted in the Department of E.N.T and Head & Neck Surgery on 20 patients with cystic thyroid swelling visiting in our OPD over a period of one year were thouevaluated history taking, general and local examination,ultrasonography,fine needle aspiration cytology,thyroid profile(euthyroid patients were taken). Usg guided 95% ethanol istillation was done and significant reduction in volume was studied at the end of 3 months follow–up period. Result:Mean age of the patients in this study was 36.65 years range 18–51 years among them 90% were female and 10% were male patients M:F ratio 9:1. Mean volume reduction rate (%) was found 53.81 % after one month,73.97 % after two months, >90 % after 3 months of instillation of sclerosing agent and Mean volume reduction rate (%) after 3 months of re–instillation was recorded 92.39%. Conclusion: We conclude that, in the management of benign thyroid cysts, USG–guided percutaneous ethanol injection is a cost–effective and efficient non–surgical treatment modality with higher success rates. It is a relatively safe procedure with very low or no complication rates, and has better patient tolerability.