Atypical adenomatous hyperplasia (AAH) of the lung is a putative precursor of bronchoalveolar carcinoma (BAC). To define the steps in its development and to clarify at which stage critical cellular events occur, we studied 65 lesions of AAH, early BAC, and overt BAC by morphometric analysis and immunohistochemical evaluation of expression of p53 protein and carcinoembryonic antigen (CEA). Both the nuclear area and lesion size increased from AAH to early BAC and to overt BAC; the standardized variation of nuclear area was smallest in overt BAC. Discriminant analysis using these morphometric parameters revealed high accuracy rates for the respective categories. Analysis of distribution of lung lesions in terms of nuclear area and lesion size yielded effective, potentially diagnostic cutoff values for distinction between AAH and early BAC. Both p53 and CEA expression tended to increase with the advance of atypia grade. In particular, high-level p53 expression was strongly correlated with overt BAC. These findings indicate that our classification of lung lesions is reproducible and thus useful for analyzing the development of BAC. Furthermore, some kinds of p53 gene abnormalities that are correlated with high-level p53 expression likely play an important role in the progression of early to overt BAC.