Barrett's oesophagus (BE) is the most common cause of oesophageal adenocarcinoma. Adenocarcinoma develops through a meta-plasia-dysplasia-carcinoma sequence, but there are many unknown and controversial issues related to the diagnosis, classification, pathological criteria, molecular progression, natural history and treatment of metaplastic and dysplastic precursor lesions in BE. The purpose of this lecture (review) is to provide an evidence-based summary of the diagnosis and classification of BE-associated metaplasia and dysplasia, to provide a summary of the key pathological features of the most common types of precursor lesions, to outline common areas of diagnostic difficulties, and to evaluate adjunctive markers of cancer progression in BE. The current American College of Gastroenterologists (ACG) definition of BE is partially flawed, since not all cases of BE are endoscopically recognisable, non-goblet epithelium is biologically intestinalised and genetically abnormal, and determination of the presence or absence of goblet cells is susceptible to sampling error and variability with time. Metaplastic epithelium in BE shows clonal molecular abnormalities that precede morphological expression of dysplasia. Dysplasia in BE begins in the crypt bases and then extends more superficially to include the upper portion of the crypts and surface epithelium with time and progression. Low and high grade dysplasia are distinguished by the presence of marked cytological and/or architectural abnormalities in the latter compared to the former, but there are newly discovered subtypes of dysplasia, such as the foveolar and serrated type, in which differentiation of low from high grade dysplasia is difficult and the significance of grading dysplasia is unknown. For instance, one type of dysplasia (foveolar dysplasia) may occur in non-goblet metaplastic columnar epithelium and shows a high progression rate to carcinoma compared to conventional (intestinal type) dysplasia. There are few, if any, reliable adjunctive diagnostic techniques that can help differentiate non-dysplastic from dysplastic epithelium in BE, but α-methylacyl coenzyme A racemase (AMACR) staining has been shown to be useful in several different studies. Both low and high grade dysplasia are progressive lesions, and in general, the extent of dysplasia is a strong risk factor for progression to carcinoma. Of all the biological and genetic biomarkers studied to date, evaluation of DNA content is the most reliable and specific marker of progression in BE. The management of patients with dysplasia is variable between institutions, and ranges from aggressive surveillance, endoscopic mucosal resection, either with or without mucosal ablation, or total oesophagectomy. Recent data on radiofrequency ablation in BE is promising.