Background: Ependymomas constitute 8–10 and 1–3% of central nervous system tumors in children and adults, respectively. Though intraoperative squash smear cytology is well documented, grading is rarely described. Objectives: (1) To assess cytomorphology and grade ependymomas in squash smears. (2) To compare utility of hematoxylin and eosin (H&E) and toluidine blue (TB) staining. Study Design: Ependymomas diagnosed from 2004 to 2010 were retrieved from pathology records. Intraoperative squash smears stained with TB and H&E were studied. Results: Histological sections of 29 ependymomas were graded according to WHO 2007 classification. There were 3 myxopapillary (grade I), 13 grade II, and 13 grade III (anaplastic) ependymomas. Perivascular pseudorosettes were seen in 23 smears, and 11 showed rosettes. Less cohesive cells at the periphery of fragments with unipolar cytoplasmic processes were seen in all smears. The background was fibrillary in all except in myxopapillary ependymoma. Metachromatic material was seen in myxopapillary ependymoma around vessels and in globi. The nucleus was round with stippled chromatin and 1–2 small nucleoli could be seen. All smears of grade III ependymomas showed pleomorphism, mitoses, microvascular proliferation and necrosis. Conclusion: Ependymomas can be diagnosed and graded reliably by squash smear. Myxoid stroma was better appreciated by TB staining. TB and H&E complement each other in squash smears for cytomorphology.