Barrett's metaplasia is associated with an increased risk for adenocarcinoma. Adenocarcinoma develops through a multistep process characterized by defects in genes and morphological abnormalities. The early morphological changes of the process are called ‘dysplasia’. Dysplasia is defined as an unequivocal neoplastic (premalignant) transformation confined within the basement membrane. For most Western pathologists malignancy is defined as invasion and characterized by a breach through the basement membrane. Japanese pathologists rely on cytological atypia and complex branching of crypts. Cytological and architectural abnormalities allow identification of dysplasia on routinely stained sections. A distinction is made between low- and high-grade dysplasia. The differential diagnosis between low-grade dysplasia and reactive changes can be difficult. Therefore a second opinion is strongly recommended, not only for high-grade dysplasia but also for low-grade. Immunohistochemistry for p53 and flow cytometry for detection of aneuploidy can support the diagnosis. Identification of dysplasia and malignancy depends on the number of biopsy samples examined. The minimum number of biopsies required has not yet been determined and depends partly on the length of the metaplastic segment. It has been proposed to sample with four quadrant biopsies at 20-mm intervals. New endoscopic techniques can increase the diagnostic yield. Endoscopically visible lesions increase the risk of finding malignancy. The time sequence for the progression of dysplasia is not known but progression from low- to high-grade and cancer has been shown to occur over a period of years although it may not be inevitable.