An increasingly large body of work suggests that atypical adenomatous hyperplasia (AAH) of the lung may be a forerunner of pulmonary adenocarcinoma. Recognizing this fact, the World Health Organization now acknowledges the existence of AAH while noting difficulties that may be encountered in distinguishing AAH from the nonmucinous variant of bronchioloalveolar carcinoma. Regrettably, a universally acceptable definition of morphologic criteria for the diagnosis of AAH has not been achieved. This review of the literature examines the epidemiology, gross appearance, light microscopic findings, morphometry, immunohistochemistry, and molecular features of AAH and suggests a set of histopathologic features that may help the practicing pathologist identify this intriguing lesion. These features include the following: irregularly bordered focal proliferations of atypical cells spreading along the preexisting alveolar framework; prominent cuboidal to low columnar alveolar epithelial cells with variable degree of atypia but less than that seen in adenocarcinoma; increased cell size and nuclear-cytoplasmic ratio with hyperchromasia and prominent nucleoli, generally intact intercellular attachment of atypical cells with occasional empty-looking spaces between them without high cellularity and without tufting or papillary structures; and slight thickening of the alveolar walls on which the AAH cells have spread, with some fibrosis but without scar formation or significant chronic inflammation of the surrounding lung tissue. Several lines of evidence indicate that AAH is a lesion closely associated with adenocarcinoma of the lung, suggesting AAH may be involved in the early stage of a complex multistep carcinogenesis of pulmonary adenocarcinoma.