Sometimes squirrels get what we in WV used to call warbles. This is the larva of the bot fly. Sheep sometimes get infested with them. BTW there is also a human bot fly in some tropical areas.
It's an all-too-common call to offices of the Florida Fish and Wildlife Conservation Commission (FWC) this time of year." There's a squirrel in my yard with lumps all over its body and it's jumping in the air, rolling on the ground and acting crazy. What's wrong with it," the typical caller asks.
Although squirrels might be acting a little, well, squirrelly this time of year, biologists say it's really nothing to get alarmed about. " When people call they describe these unusual antics, as well as large lumps on the squirrel's body that appear to be cancerous tumors," said Stan Kirkland, the FWC's public information coordinator for the Northwest Region. "The good news is the lumps are not malignant tumors. In fact, they are caused by 'warbles,' which are Bot fly larvae growing just under the squirrel's skin." In fact, once the larvae emerge in the fall, the squirrel generally recovers without further incident. However, while the insects are burrowed under the skin, they are a real annoyance to the squirrel. "In the Southeast United States, gray squirrels and other rodents, and rabbits, are commonly affected by Bot fly warbles. Horses and cattle are sometimes affected by them too," Kirkland said.
http://www.pestproducts.com/pests/nuttysquirrel.htm