Phyllodes tumors are fibroepithelial mammary lesions that tend to behave in a benign fashion but may undergo sarcomatous transformation. A study of clonality in these tumors has suggested that the epithelial component is polyclonal, but the stroma is monoclonal, and thus forms the neoplastic component of the lesion. In this study microsatellites on chromosome 1q and chromosome 3p were assessed for allelic imbalance (AI) in 47 phyllodes tumors; in all cases stroma and epithelium were analyzed separately. Ten of 42 (24%) phyllodes tumors showed AI at one or more markers on 3p, and 14 of 46 (30%) showed AI on chromosome 1. Five tumors had changes in both the epithelium and stroma. Eight tumors had changes only detectable in the stroma and eight, changes in the epithelium only. Three tumors exhibited low-level microsatellite instability in the epithelium but not in the stroma. The results show that AI on 3p and 1q does occur in phyllodes tumors and that it can occur in both the stroma and epithelium, sometimes as independent genetic events. These unexpected findings throw into doubt the classical view that phyllodes tumors are simply stromal neoplasms and raise questions about the nature of stromal and epithelial interactions in these tumors.