The morphological diagnosis of gastric dysplasia is based on the presence of changes in the architecture, cytology and differentiation of the epithelium and mucosal glands. Two morphological types exist: gastric (foveolar) and metaplastic. Definite morphological criteria for gastric dysplasias can be presented. The present morphological grading of dysplasia into mild, moderate or severe is, however, arbitrary and subjective. The available investigations show that dysplasia and overt carcinoma have several biological and epidemiological links that indicate that a dysplasia-cancer sequence operates in the pathogenesis of at least a proportion of gastric carcinomas. The data available in the literature strongly indicate that severe dysplasia is highly predictive for coexisting or shortly appearing carcinoma. The literature on the clinical significance of dysplasia of mild or moderate grade, however, is as yet scanty and inconsistent.