In the gastrointestinal tract, the term 'dysplasia' is used to refer to non-invasive neoplastic epithelium. Although we recognise adenomas of the gut as dysplastic, we don't use the term 'dysplasia' in reporting them. The use of the term 'dysplasia' for pre-invasive epithelium gradually came to replace other terms in studies attempting to identify epithelial changes that were cancer precursors in surveillance biopsies of patients with chronic colitides. The two-tier system of classification, dividing dysplasias into low-grade or high-grade lesions is conceptually straightforward; however, difficulties exist in the distinction of regenerative epithelium from low-grade dysplasia, of low-grade from high-grade dysplasia, and in identifying superficially invasive carcinoma in a dysplastic mucosa. The category 'indefinite for dysplasia' is an honest recognition of the difficulties in distinguishing reactive or regenerative epithelium from low-grade dysplasia, since these epithelia share many cytological features. In surveillance biopsies in ulcerative colitis and Barrett's mucosa, for each epithelial category from non-dysplastic through indefinite, low-grade and high-grade dysplasia, there are specific management recommendations that vary from no change in surveillance to increased surveillance to definitive therapy that is often a major resection. The recommendation for referral of high-grade dysplasias to consultants reflects the concern pathologists have about making such clinically significant diagnoses with limited experience. Pathologists should use the accepted terminology, share cases to expand their experience, and seek consultation in selected cases. This paper follows the evolution of the dysplasia concept, details the difficult areas of diagnosis, and discusses the importance of interaction between clinicians and pathologists in dealing with dysplasias.