The presumed precursor lesions of pancreatic ductal adenocarcinoma were recently classified according to their increasing grade of dysplasia and were designated as pancreatic intraepithelial neoplasia (PanIN) 1 through 3. In this study, we tested whether molecular genetic alterations can be correlated with this classification and may help to further categorize the various PanIN grades. We determined the frequencies of allelic loss at chromosomal arms 9p, 17p, and 18q in 81 microdissected duct lesions of various PanIN grades, using a combination of whole genome amplification and microsatellite analysis. In addition we examined the p53 and Dpc4 protein expression patterns by immunohistochemical analysis. In PanIN-1, we did not detect allelic losses. In PanIN-2, allelic losses were found in increasing frequency, and were particularly high in those lesions with moderate-grade dysplasia (low grade, 20, 33, and 17%, loss at 9p, 17p, and 18q, respectively; moderate grade, 46, 77, and 58%). PanIN-3 and invasive carcinomas exhibited abundant losses. Abnormal p53 and Dpc4 protein expression was only rarely identified in PanIN-2 lesions, but occurred frequently in PanIN-3 lesions and invasive carcinomas. The combined genetic and protein expression data support a model in which allelic loss is the first hit in the biallelic inactivation of the p53 and DPC4 tumor suppressor genes. In addition, our data indicate that allelic loss analysis may be useful in separating PanIN-2 lesions with low-grade dysplasia from those PanIN-2 lesions with moderate-grade dysplasia, each potentially representing a distinct progression step toward invasive carcinoma.