High-risk multiple myeloma (MM) is genomically unstable, comprised of heterogeneous populations of tumor cells that evolve over time. Light chain escape (LCE) is a clinical phenomenon observed when light chains rise separately from M-spike values, implying divergent tumor evolution. We sought to understand LCE by performing high depth transcriptomic and phenotypic studies. We performed single cell RNA sequencing and ex vivo drug sensitivity profiling on serial bone marrow biopsies from a patient with LCE at diagnosis, first relapse and relapsed/refractory timepoints. Single cell RNA sequencing uncovered distinct transcriptomic subpopulations with phenotypes that could be tracked separately by clinical serum light chain and M-spike values. Genes differentially expressed between subpopulations were assessed for generalizable effects on prognosis from the MMRF CoMMpass and GSE24080 datasets. Notably, the LCE subpopulation exhibited gene expression profile featuring prominent LAMP5-overexpression, which was associated with risk for osteolytic bone lesions. Ex vivo drug sensitivity testing displayed differential sensitivity of the subpopulations. Copy Number Variant inference showed that the transcriptomic subpopulation underlying LCE was related to a genetic subclone that evolved over time. Our findings illustrate that malignant subpopulations underly light chain escape in multiple myeloma. These studies implied that LCE and LAMP5 gene overexpression portends for increased risk of osteolytic bone disease and adverse prognosis, findings that were confirmed in the subset of patients in the CoMMpass database with light chain escape.