Foci of cytologic atypia with some of the histologic features of malignancy were identified in ductal and acinar lining epithelia from 100 serially blocked prostates with adenocarcinoma and 100 benign prostates obtained at autopsy. Criteria for diagnosis and grading of severity were established for this lesion, which is referred to as intraductal dysplasia. The histologic features, extent, and severity of intraductal dysplasia were compared between the two groups. Eighty-two prostates with carcinoma and 43 benign prostates contained foci of dysplasia. The severity (grade) and extent of dysplasia were greater in the prostates with carcinoma. Grade 3 dysplasia was found in 33 per cent of the prostates with cancer but in only 4 per cent of the benign prostates. The frequency of multiple, independent invasive carcinomas was high among prostates with multiple foci of dyplasia. It was concluded that dysplasia is probably a direct biologic precursor of prostatic carcinoma and may be the antecedent lesion in the majority of prostatic cancers.