Although bronchogenic carcinomas progress through a very well defined sequence of metaplasia, dysplasia and carcinoma in situ, very little is known about the early progression of glandular neoplasms of the lung. In particular, the early precursor lesion from which fully malignant adenocarcinomas arise has effectively eluded recognition, at least until recently. Several lines of evidence now implicate atypical adenomatous hyperplasia (AAH) as an initial morphologic stage in multistep lung tumorigenesis. Despite its small size, AAH can be appreciated at the light microscopic level and characterized at the molecular genetic level. Indeed, the genetic characterization of AAH promises to further our understanding of lung cancer development and might facilitate the design of novel strategies for early detection of lung cancer.