Inverted papilloma of the ureter is a rare tumor generally considered to be a benign lesion. We present a case of ureteral inverted papilloma with malignant transformation and review the literature. Ten cases of ureteral inverted papillary tumors in Japan and 13 cases of inverted papillary tumors associated with malignancy in the urinary tract in the world literature have been analyzed to define their features. Inverted papillary tumors of the ureter have distinct clinicopathological features, but most are discovered retrospectively after nephroureterectomy. From the standpoint of clinicopathological features, inverted papillary tumor of the ureter should be distinguished from its exophytic counterpart with respect to the treatment. If the tumor can be diagnosed macro- and microscopically during surgery as inverted papilloma or malignant inverted papillary tumor without invasion, partial ureterectomy including the lesion may be recommended. Furthermore, we propose the hypothesis that inverted papillary tumor could be a neoplasm of basal cell origin in the transitional epithelium, termed 'basal cell urothelioma'.