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CORRESP
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November 29, 2010

Securities
and Exchange Commission

Division of Corporate Finance

100 F Street, N.E.

Washington, D.C. 20549

Attention:  Brian R. Cascio, Accounting
Branch Chief

Re:          Accuray Incorporated

Form 10-K for the Fiscal Year Ended June 30, 2010

Filed on September 1, 2010

File Number:  000-33301

Dear
Mr. Cascio:

We
are responding to the comments raised by the staff (the “Staff”) of the
Securities and Exchange Commission in a letter dated October 28, 2010 (the
“Comment Letter”) related to the above referenced filing.  We appreciate the Staff’s (specifically,
Jeanne Bennett and Aslynn Hogue) accommodating our request to have until November 29,
2010, to submit our response. For your convenience, we have repeated the
comments contained in the Comment Letter below in italic type before our
response.

Form 10-K
for the fiscal year ended June 30, 2010

Item
1.  Business

1.                                      We note
your disclosure that your CyberKnife system is designed to treat solid tumors
anywhere in the body as an alternative to traditional (invasive) surgery.  With a view towards revised disclosure in
your future filings, please tell us which cases your system would not be
indicated for and the reasons why.

Response:

In
our future filings, we will include the following disclosure, updated as
appropriate, regarding the types of cases for which the CyberKnife system may
not be indicated:

A determination of when it may or may not be
appropriate to use the CyberKnife system for treatment is at the discretion of
the treating physician and

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depends
on the specific patient.  Given, however,
the CyberKnife system’s design to treat focal tumors, the CyberKnife system is
generally not used to treat (1) very large tumors, which are considerably
wider than the radiation beam that can be delivered by the CyberKnife system, (2) diffuse,
wide-spread disease, as is often the case for late stage cancers, because they
are not localized (though the CyberKnife system might be used to treat a focal
area of the disease) and (3) systemic disease, like leukemias and
lymphomas, which are not localized to an organ, but rather involve cells
throughout the body.

2.                                      We note
your disclosure that the cost of your system is a factor affecting the sales of
your product.  In future filings, please
also disclose, to the extent known, the range of costs for the facilities that
are required to be constructed to house your systems and enhance your
disclosure as appropriate.

Response:

We
acknowledge the Staff’s request that our future filings include additional
information regarding the costs associated with the radiation-shielded
facilities customers must have to house the CyberKnife system.  Although Accuracy is not typically
responsible for the costs associated with building these facilities, as we
discussed with the Staff, our future filings will disclose, to the extent
known, the range of costs for the facilities that are required to be
constructed to house our systems, and our disclosure will be enhanced as
appropriate.

Selected
Financial Data, page 51

3.                                      We see
that you present a line item captioned “net income attributable to common
shareholders”.  Please tell us why you
have included this caption since there does not appear to be any other equity
ownership that would also share net income.

Response:

We
acknowledge the Staff’s comment regarding the reference to “common shareholders”
in the referenced caption of our Selected Financial Data table.  The Staff correctly notes that we have only
one class of equity ownership outstanding.
We do have authorized blank check preferred stock, though none is
outstanding.  The reference to “common
shareholders” is a legacy reference from a time at which we had outstanding
preferred stock.  Accordingly, in our
future filings, we will revise this caption to read “Net income (loss).”

Management’s
Discussion and Analysis

Critical
Accounting Policies and Estimates, page 67

4.                                      Please
revise future filings to provide a discussion of your critical accounting
policies including judgments and uncertainties affecting the application of
those policies, and the

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likelihood that materially
different amounts would be reported under different conditions or using
different assumptions.  Such disclosure
should supplement, not duplicate, the description of accounting policies that
are already disclosed in the notes to the financial statements.  The disclosure should provide greater insight
into the quality and variability of information regarding financial condition
and operating performance. Please note that while accounting policy notes in
the financial statements generally describe the method used to apply an
accounting principle, the discussion in MD&A should present a company’s analysis
of the uncertainties involved in applying a principle at a given time or the
variability that is reasonably likely to result from its application over
time.  Refer to FR-72 and SEC Release No. 33-8040.

Response:

We acknowledge the Staff’s
request for a discussion of our critical accounting policies in our Management’s
Discussion and Analysis, including judgments and uncertainties affecting the
application of those policies, and the likelihood that materially different
amounts would be reported under different conditions or using different
assumptions.  Accordingly, our future
filings will include the following discussion, updated as appropriate, of our
critical accounting policies:

Critical Accounting Policies and Estimates

The discussion and analysis of our financial
condition and results of operations is based on our consolidated financial
statements, which have been prepared in accordance with GAAP. The preparation
of these consolidated financial statements requires management to make estimates
and judgments that affect the reported amounts of assets and liabilities and
the disclosure of contingent assets and liabilities at the date of the
consolidated financial statements, as well as revenue and expenses during the
reporting periods. We evaluate our estimates and judgments on an ongoing basis.
We base our estimates on historical experience and on various other factors we
believe are reasonable under the circumstances, the results of which form the
basis for making judgments about the carrying value of assets and liabilities.
Actual results could therefore differ materially from those estimates if actual
conditions differ from our assumptions.

Note 2, “Summary
of Significant Accounting Policies,” in Notes to the Consolidated
Financial Statements, which is included in Item 8. Financial Statements
and Supplementary Data, describes our significant accounting policies and
methods used in the preparation of our Consolidated Financial Statements. The
methods, estimates and judgments that we use in applying our accounting
policies require us to make difficult and subjective judgments, often as a
result of the need to make estimates regarding matters that are inherently
uncertain. Management believes the critical accounting policies and estimates
are those related to revenue recognition, inventory valuation, stock-based
compensation, income taxes, legal and other contingencies and corporate bonus
accruals.

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Revenue Recognition

We frequently enter into sales arrangements with
customers that contain multiple elements or deliverables such as hardware,
software and services.  In order to
comply with GAAP, we have to make a number of reasoned judgments with respect
to elements of these sales arrangements, including how to allocate the proceeds
received from an arrangement, whether there are multiple elements of the
arrangement, whether any undelivered elements are essential to the
functionality of the delivered elements and the appropriate timing of revenue recognition
with respect to these arrangements.  For
revenue arrangements with multiple elements which were entered into by
June 30, 2010 and which have not subsequently been materially modified, we
allocate arrangement consideration to each element based upon vendor specific
objective evidence, or VSOE, of fair value of the respective elements. VSOE of
fair value for each element is based upon our historical standard rates charged
for the product or service when such product or service is sold separately or based
upon the price established by our management-comprised pricing committee, which
has the relevant authority when that product or service is not yet sold
separately. Changes to the elements in an arrangement and the ability to
establish VSOE of the fair value for those elements could affect the timing and
the amount of revenue recognition.

In the first quarter of fiscal 2011, we adopted
Accounting Standards Update, or ASU, 2009-13, Multiple-Deliverable
Revenue Arrangements, (amendments to Accounting Standards
Codification, or ASC, Topic 605, Revenue
Recognition), or ASU 2009-13, (formerly Emerging Issues Task Force,
or EITF, Issue 08-1) and ASU 2009-14, Certain
Arrangements That Include Software Elements, (amendments to
Financial Accounting Standards Board, or FASB, ASC Topic 985, Software), or ASU 2009-14, (formerly EITF
09-3). The new standard changes the requirements for establishing separate
units of accounting in a multiple element arrangement and requires the
allocation of arrangement consideration to each deliverable to be based on the
relative selling price. The FASB also amended the accounting standards for
revenue recognition to exclude software that is contained in a tangible product
from the scope of software revenue guidance if the software is essential to the
tangible product’s functionality. We adopted these new standards on a
prospective basis; therefore, they apply only to revenue arrangements entered
into or materially modified beginning July 1, 2010. The revised guidance
primarily provides two significant changes: 1) it requires us to allocate
revenues in an arrangement using best estimated selling prices, or BESP, of
deliverables if we do not have VSOE or third-party evidence, or TPE, of selling
price; and 2) it eliminates the residual method and requires us to allocate
revenue using the relative selling price method. The BESP is established
considering multiple factors including, but not limited to, pricing practices,
internal costs, geographies and gross margin. The determination of BESP is made
through consultation with and formal approval by our pricing committee, taking
into consideration the overall go-to-market pricing strategy. We may modify or
develop new go-to-market practices in the future. As these go-to-market strategies
evolve, we may modify our pricing practices in the future, which may result in
changes in selling prices, impacting both VSOE and BESP. These factors may
result in a different allocation of revenue to the deliverables in multiple
element arrangements from the

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current
fiscal year, which may change the pattern and timing of revenue recognition for
these elements but will not change the total revenue recognized for the
arrangement.

Revenue recognition also depends on all or a
combination of the timing of shipment, completion of installation, customer
acceptance and the readiness of customers’ facilities. If shipments are not
made on scheduled timelines, installation schedules are delayed or if the
products are not accepted by the customer in a timely manner, our reported
revenues may differ materially from expectations. For
example, if a CyberKnife system were sold for $4 million and the sale involved
multiple elements including training and service, a 5% change in BESP of the
system could result in an increase or a decrease of approximately $25,000 in
the amount of revenue allocated and recognized as product revenue rather than
as service revenue.

Inventories

The valuation of inventory requires us to estimate
obsolete or excess inventory as well as damaged inventory. The determination of
obsolete or excess inventory requires us to estimate the future demand for our
products. We regularly review inventory quantities on hand and adjust for
excess and obsolete inventory based primarily on historical usage rates and our
estimates of product demand to support future sales and service. If our demand
forecast for specific products is greater than actual demand and we fail to
reduce purchasing and manufacturing output accordingly, we could be required to
write off inventory, which would negatively impact our gross margin. For example, if the actual amount of inventory that is
disposed of as obsolete, excess or damaged is 10% larger or smaller than the
amount that we estimated at June 30, 2010, then we would need to increase
or decrease cost of sales by approximately $250,000.

Stock-Based Compensation Expense

We use the Black-Scholes option valuation model to
estimate the fair value of stock options and Employee Stock Purchase Plan
shares. The Black-Scholes model requires the input of highly subjective
assumptions. The most significant assumptions are our estimates of the expected
volatility and the expected term of the award. Our expected volatility is
derived from the historical volatilities of several unrelated public companies
within industries related to our business because we do not have sufficient
trading history on our common stock. When making the selections of our peer
companies within industries related to our business to be used in the
volatility calculation, we also considered the stage of development, size and
financial leverage of potential comparable companies. In addition, as our
historical share option exercise experience does not provide a reasonable basis
upon which to estimate the expected term, we estimate the expected term of
options granted by taking the average of the vesting term and the contractual
term of the option, as illustrated by the simplified method. The assumptions
used in calculating the fair value of share-based payment awards represent
management’s best estimates, but these estimates involve inherent uncertainties
and the application of management judgment. As a result, if factors change and
we use different assumptions, our stock-based compensation expense could be
materially different in the future.

We recognize compensation cost for only those shares
expected to vest over the requisite service period of the award. We estimate
our forfeiture rate based on an analysis of our actual forfeitures and will
continue to evaluate the appropriateness of the forfeiture rate based on recent
forfeiture activity and expected future employee turnover. Quarterly changes in
the estimated forfeiture rate can have a significant effect on reported stock-based
compensation expense, as the cumulative effect of adjusting the rate for all
expense

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amortization
is recognized in the period the forfeiture estimate is changed. If a revised
forfeiture rate is higher than the previously estimated forfeiture rate, an
adjustment is made that will result in a decrease to the stock-based
compensation expense recognized in the consolidated financial statements. If a
revised forfeiture rate is lower than the previously estimated forfeiture rate,
an adjustment is made that will result in an increase to the stock-based
compensation expense recognized in the consolidated financial statements. For example, a change to our estimated forfeiture rate by 5%
would result in an increase or decrease in overall stock-based compensation
expense in a fiscal year by approximately $1.2 million.

Income Taxes

We calculate our
current and deferred tax provisions based on estimates and assumptions that
could differ from the actual results reflected in our income tax returns filed
during the subsequent year. We record adjustments based on filed returns when
we have identified and finalized them, which is generally in the third quarter
o