In a series of 100 prostatectomy specimens obtained for adenocarcinoma, 107 additional incidental microscopic (less than 0.05 cm3) carcinomas were identified. Their morphologic features including location, histologic grade, and associated premalignant changes were documented. In 51 cases there was strong evidence of transition between microcarcinoma and the premalignant lesion, duct-acinar dysplasia. Invasive cancer was usually related to dysplasia through a characteristic intermediate morphologic stage of transitive glands. These glands were smaller than prostatic ducts; they appeared to arise by budding from dysplastic duct walls and showed the same distinctive lining epithelium. They were distinguished from invasive glands by their pseudo-stratified epithelial lining and by consistent association with a sparse, discontinuous basal cell layer. Cytoplasmic differentiation at the point of junction of invasive cancer with transitive or dysplastic glands was studied by immunohistochemical staining for the differentiation markers prostate-specific antigen and pepsinogen II, and staining for mucin. Markedly reduced cytoplasmic differentiation was common in dysplastic and transitive glands. Invasion often coincided with an abrupt increase in cytoplasmic differentiation with expression of ectopic differentiation products. This sequence of biologic changes should be tested in other carcinomas where the exact point of invasion can be identified.