Diagnosis of squamous cell carcinoma of the esophagus is usually late. Staining of the mucosa with Lugol's solution during endoscopy has been suggested to identify early cancer/dysplasia and may improve prognosis. Lugol was tested during endoscopy in 96 asymptomatic subjects at risk for this tumor, who were found to have atypias after exfoliative cytology in southern Brazil. Biopsies were obtained in Lugol's 'stained' and 'unstained' areas in the esophageal mucosa and the histologic results were compared. 'Unstained' areas were present in 64 (66.7%) instances: 44 'unstained' areas over mucosa with normal appearance revealed seven dysplasias (four high and three low grade), whereas 20 'unstained' areas with visible lesions contained only one dysplasia (low grade). 'Stained' areas in 96 (100%) subjects showed two additional dysplasias (one high and one low grade). In this study, Lugol 'unstained' areas were of great value for detection of dysplasias (sensitivity = 80%; specificity = 63%; p = 0.01, Fisher's exact test; CI = 95%; odds ratio = 6.7).