Chronic ulcerative colitis is associated with a high risk of colon cancer. The most appropriate management--prophylactic proctocolectomy or medical surveillance--is, at present, unclear. Recent reports suggest that the presence of colonic dysplasia or "precancer" on endoscopic biopsy may be a reliable predictor of concurrent or future colon cancer. To assess the value of colonic dysplasia in managing colitis patients, I applied decision analytic techniques to currently available data regarding the sensitivity and specificity of colonic dysplasia in colitis patients. Such analysis shows that management based on biopsy for colonic dysplasia, rather than prophylactic proctocolectomy for all colitis patients, will maximize 5-year survival. Sensitivity analysis suggests that management is primarily determined by the sensitivity of biopsy-diagnosed dysplasia--elective prophylactic surgery would be preferred only when sensitivity of dysplasia on biopsy is less than or equal to 0.70 at 20 years, or less than or equal to 0.85 at 30 years of colitis, and changing surgical mortality and survival benefit from early diagnosis within a range established by previous studies affects management decisions only when sensitivity of dysplasia is at the lower end of its reported range.