Design of a laboratory prototype, product development and clinical testing of a real-time hand-held confocal line-scanner is proposed for imaging-guided microsurgery applications. Line scanning offers resolution, contrast and field of view that are required for intrasurgical imaging. In the Phase I feasibility project, the laboratory prototype successfully demonstrated imaging of nuclear and cellular detail in human epidermis in vivo with 5-10 microns resolution. In Phase II, the goals are to quantitatively characterize optical performance within living human skin, package the prototype into a hand-held confocal scanner product, and test the scanner for imaging basal cell cancers on patients during Mohs surgery. Vis-a-vis the current method based on frozen pathology, real-time in situ confocal imaging may save both Mohs surgeon and patient several hours in the operating room. The hand-held line-scanning confocal microscope will have everything that surgeons and patients want: simple and robust design, inexpensive ($10K-20K), user-friendly package, controls and interface, and standard detection and display systems. The first application is for skin cancer but other tissues will be subsequently imaged as well. The intended users are surgeons, and the potential benefits to the patient are: painless, fast, less expensive and therefore significantly improved healthcare.