The early sequential development of gastric cancer was studied with experimental animals and examined with respect to what conclusions can be drawn for understanding carcinogenesis in man. After limited oral administration of N-methyl-N'nitro-N-nitrosoguanidine to 174 rats carcinomas developed in most cases directly from the otherwise unchanged mucosa through various successive stages of transformation, without passing through a benign-appearing proliferative or neoplastic epithelial lesion. Focal dysplasia grade I was the first recognizable change observed by light microscopy, followed by dysplasia grade II, and subsequently dysplasia grade III. In spite of very similar morphological characteristics, the experimentally induced dysplasias cannot be simply equated in their etiology and biological behavior with the dysplasias of the human stomach. Dysplasias of grade I and II commonly found in man are usually associated with a chronic gastritis; they are located in the upper third of the mucosa and are for the most part reversible. The experimental dysplasias occuring in the proliferative zone of an otherwise undisturbed mucosa must be considered potentially premalignant, as they are irreversible and develop progressively. This finding points out that in man dysplasias grade III within the regenerative zone of non-inflammatory mucosa should be considered particularly as possible precursors of gastric carcinomas.