Preinvasive bronchial lesions defined as dysplasia and carcinoma in situ (CIS) have been considered as precursors of squamous cell carcinoma of the lung. The risk and rate of progression of preinvasive lesions to invasive squamous cell carcinoma as well as the mechanism of progression or regression are incompletely understood. While the evidence for the multistage, stepwise progression model is weak with relatively few documented lesions that progress through various grades of dysplasia to CIS and then to invasive carcinoma, the concept of field carcinogenesis is strongly supported. The presence of high-grade dysplasia or CIS is a risk marker for lung cancer both in the central airways and peripheral lung. Genetic alterations such as loss of heterozygosity in chromosome 3p or chromosomal aneusomy as well as host factors such as the inflammatory load and levels of anti-inflammatory proteins in the lung influence the progression or regression of preinvasive lesions. CIS is different than severe dysplasia at the molecular level and has different clinical outcome. Molecular analysis of dysplastic lesions that progress to CIS or invasive cancer and rare lesions that progress rapidly from hyperplasia or metaplasia to CIS or invasive cancer will shed light on the key molecular determinants driving development to an invasive phenotype versus those associated with tobacco smoke damage.