Recently the suspected precursor lesions of ductal adenocarcinoma of the pancreas have been called Pancreatic intraepithelial neoplasia (PanIN) and graded according to the degree of dysplasia. To correlate each grade of PanIN with molecular genetic alterations, we determined the frequency of allelic losses at chromosomal arms 9p (the location of the p16 gene), 17p (p53 gene) and 18q (DPC4/SMAD4 gene) in 81 microdissected PanINs, using a combination of whole genome amplification and microsatellite analysis. In addition, p53 and Dpc4 protein expression was determined by immunohistochemistry. Essentially no allelic losses were identified in the non-dysplastic PanIN-1 lesion. In PanIN-2 with low grade dysplasia the frequency of allelic losses at chromosomal region 9p, 17p and 18q was 20%, 33% and 17%, respectively, which increased to 46%, 77% and 58%, respectively, in PanIN-2 with moderate dysplasia, to 87%, 60% and 88% in PanIN-3 with high grade dysplasia, and to 100%, 91%, and 82% in the invasive carcinomas. The progressive occurrence of allelic losses at all three loci strongly supports the PanIN progression model for pancreatic carcinoma. Nuclear p53 and loss of Dpc4 protein expression was associated only with PanIN-3 and invasive carcinomas, consistent with the model that inactivation of p53 and DPC4 are late events in pancreatic carcinogenesis. Since the aberrant protein expression patterns, were preceded, however by a sharp increase in allelic losses from PanIN-2 with low grade dysplasia to PanIN-2 with moderate dysplasia it is suggested that the increasing grade of dysplasia in the PanIN lesions identify biologically relevant steps towards invasive carcinoma. The discrepancy between alleic loss frequencies and p53 and DPC4 expression also raises the possibility that additional tumor suppressor genes on chromosomes 17p and 18q promote early pancreatic carcinogenesis.