Lobular neoplasia has been traditionally recognized as a marker of increased risk for subsequent breast carcinoma development; however, molecular studies suggest that it also behaves in a non-obligate precursor manner. We do not know, as yet, how to identify the subgroup of cases that is most likely to progress, but the epidemiological data would indicate that this progression occurs after a long period of time. Thus, the current approach of conservative management of these lesions when identified in excision specimens is justified. Recently, several variants of lobular carcinoma in situ (LCIS), most notably pleomorphic LCIS, have been recognized and these can be difficult to differentiate from ductal carcinoma in situ. Application of strict diagnostic criteria and the judicial use of immunohistochemistry, particularly E-cadherin, can be helpful in this differential diagnosis. Another challenging issue is the management of lobular neoplasia when diagnosed on core biopsy. This controversial issue will be discussed in detail. The goals of this review are (1) to describe the morphological criteria used to diagnose the spectrum of lobular neoplastic lesions, including atypical lobular hyperplasia, LCIS and variants of LCIS; (2) to discuss the data exploring the biological potential of lobular neoplasia from an epidemiological and molecular viewpoint; and (3) to outline the recommendations for management of lobular neoplasia when encountered in core biopsies.