The classification of flat urothelial (transitional cell) lesions with atypia has historically varied in its application from institution to institution with no fewer than six major nomenclature systems proposed in the past 25 years. In 1998, the World Health Organization/ International Society of Urological Pathology (WHO/ISUP) published a consensus classification that included the following categories for flat urinary bladder lesions: reactive atypia, atypia of unknown significance, dysplasia (low-grade intraepithelial neoplasia), and carcinoma in situ (high-grade intraepithelial neoplasia). This classification expands the definition traditionally used for urothelial carcinoma in situ, basing its diagnosis primarily on the severity of cytologic changes. In proposing the classification system for flat lesions of the bladder with atypia, it was hoped that consistent use of uniform diagnostic terminology would ultimately aid in a better understanding of the biology of these lesions. In this review, the authors discuss the history of the concept of flat urothelial neoplasia, the rationale and histologic criteria for the WHO/ISUP diagnostic categories, an approach to the diagnosis of flat lesions, and problems and pitfalls associated with their recognition in routine surgical pathology specimens.