Activating point mutations in the FGFR3 gene occur frequently in low-grade and low-stage bladder carcinomas, whereas they are rare in high-grade carcinomas. This study investigates the incidence of FGFR3 mutations in 12 urothelial papillomas and 79 pTaG1 tumours which were regraded according to the 1998 WHO/ISUP classification system, resulting in 62 papillary urothelial neoplasms of low malignant potential (PUNs-LMP) and 17 low-grade papillary urothelial carcinomas (LG-PUCs). FGFR3 mutation analysis of 21 ovarian Brenner tumours was also performed. Seventy-seven cases were detected with a mutation in the FGFR3 gene. The mutations were exclusively found in bladder neoplasms. In urothelial papilloma, generally considered a benign lesion, 9/12 (75%) mutations were found. This report is the first to describe a genetic defect in urothelial papilloma. A comparable percentage of mutations was found in PUNs-LMP (85%) and LG-PUCs (88%). No mutations were found in matched normal DNA from bladder tumour patients. The mean follow-up was 5.78 years (range 0.21–17.60 years). Five patients developed high-grade papillary urothelial carcinoma from 2.5 to 12 years after first diagnosis. Two patients died of bladder cancer. The mean number of recurrences (recurrence rate) per year was 0.03, 0.21, and 0.46, respectively, for papilloma, PUN-LMP, and LG-PUC. Urothelial papilloma is a rare lesion with a benign natural behaviour compared with PUN-LMP and LG-PUC of the bladder, but from a molecular perspective, papillomas should be classified together with all well-differentiated urothelial neoplasms. Copyright © 2002 John Wiley & Sons, Ltd.