This prospective study was designed to evaluate the incidence of lichen sclerosus et atrophicus (LSA) in a pediatric population with hypospadias and phimosis in order to discuss the indications for circumcision and utilization of preputial skin for urethral surgery. All 115 boys, 55 with congenital phimosis, 45 with acquired phimosis, 13 with hypospadias, and 2 with recurrent chronic balanitis, underwent full-thickness biopsies of the foreskin that were examined by a single pathologist. Of the patients with acquired phimosis, 88% showed inflammatory features in the foreskin; 60% had LSA. Of the patients with congenital phimosis, 82% showed inflammatory disease in the prepuce; 30% had LSA. Of the patients operated upon for hypospadias, 61% showed histologic findings of chronic inflammation of the foreskin and LSA was evident in 15%. The high incidence of LSA in the prepuce of patients with phimosis suggests that circumcision should be performed to correct this disease. The frequent presence of chronic inflammation is a possible cause of stenosis when the foreskin is used to perform a urethroplasty in patients with hypospadias.