Gastric cancer is common among the world, but genetic mechanisms of gastric carcinogenesis are not well understood. Gastric polypoid adenomas and flat dysplasias are regarded as precursor lesions. However, a detailed molecular study of these lesions has not been done to determine their role as precancerous lesions. We investigated mutations of the APC, beta-catenin, and K-ras genes, and microsatellite instability (MSI) status in 35 adenomas and 47 flat dysplasias without adenocarcinoma, 35 adenomas/dysplasias associated with adenocarcinomas, and 39 adenocarcinomas (20 diffuse type and 19 intestinal type). Somatic APC gene mutations were identified in 76% (59 of 78) of adenomas or flat dysplasias without associated adenocarcinoma, but in only 3% (1 of 30) of adenomas/dysplasias associated with adenocarcinoma, and in only 4% (3 of 69) of adenocarcinomas (P < 0.000001). No mutations of beta-catenin were found in adenocarcinomas, or adenomas/dysplasia without APC mutation. K-ras mutations were detected in 5% (4 of 82) of gastric adenomas/dysplasia without carcinoma, 3% (1 of 39) of adenocarcinomas without associated adenoma/dysplasia, and not in 32 adenocarcinomas with associated adenoma/dysplasia. High level of MSI (MSI-H) was more frequent in gastric adenoma/dysplasia associated with carcinoma (17%, 6 of 35) than in adenomas/dysplasia without carcinoma (3%, 2 of 75; P = 0.01). MSI-H was also more frequent in intestinal type adenocarcinoma (20%, 11 of 54) than in diffuse type (0%, 0 of 20; P = 0.03). APC gene mutations were present in six of nine (67%) of gastric adenomas/dysplasias with low level of MSI, but in none of the eight adenomas/dysplasia with MSI-H phenotype (P = 0.009). Our results indicate that somatic mutation of the APC gene plays an important role in the pathogenesis of gastric adenoma and dysplasia but has a limited role in neoplastic progression to adenocarcinoma. Gastric adenomas or dysplasias without APC mutations but with or without MSI may have a different biological behavior, and are precursors of intestinal-type of gastric adenocarcinomas.