One model of breast tumorigenesis postulates a sequential evolution from normal to proliferative epithelium and eventually to neoplasia, but genetic data to support this progression have been limited. We wished to determine whether atypical hyperplasia (AH), a proliferative lesion conventionally classified and treated as benign, but associated with an increased risk of developing carcinoma, might show evidence of genetic abnormalities. Using the polymerase chain reaction (PCR), we examined DNA extracted from 12 separate AH lesions, from six breast cancer patients' paraffin-embedded tissue specimens, for alterations in microsatellite repeat sequences. Five of 12 AH lesions, from three of six patients, demonstrated alterations in microsatellite sequences in patterns indicating that the AH lesions are monoclonal or contain a substantial monoclonal component. We conclude that a subset of AH lesions from patients with breast cancer are characterized by monoclonal microsatellite alterations; therefore, they may already be neoplastic. This finding lends support to one postulated sequence of breast tumorigenesis and suggests that some type of genetic instability may play a role early in breast tumor development.