Despite extensive research the pathways of breast cancer development remain largely unknown. The identification of key genetic alterations, particularly at the early stages of the disease, are central to elucidating the developmental pathways for this disease. Pure populations of tumour cells were microdissected from well defined groups of breast lesions, comprising: ductal carcinoma in situ (DCIS) tubular carcinomas, and mammographically-detected, impalpable early stage, moderately to well differentiated invasive carcinomas, and analysed for alterations in polymorphic tandem repetitive sequences (microsatellites). This enabled analysis of microsatellite instability (MI), which has been demonstrated to be indicative of a mutator phenotype in colorectal cancer, and loss of heterozygosity (LOH), which may indicate the presence of a tumour suppressor gene. MI was demonstrated to be a tumour specific alteration not present in benign proliferative disorders. It was present in 8 of 11 (73%) high grade lesions of DCIS, but only at a low frequency in low grade DCIS and invasive carcinomas and was absent from the tubular carcinomas. Two distinct types of alteration were observed: alterations to a single trinucleotide repeat (DM-1), and alterations of multiple microsatellite loci. Cases demonstrating this phenotype did not show alterations of candidate DNA repair genes (MSH2, MLH1 and PMS2), or in key cancer associated loci (TGFpRII, IGFIIR, Bax, and E2F-4), indicating that this phenotype is distinct to that described in colorectal tumours. LOH studies were focused on chromosome 16q21-24.4, a site for which there is evidence of alteration in the early stages of the disease. A high frequency of LOH (greater than 40%) was observed in all carcinomas. A candidate tumour suppressor gene, E-cadherin, mapping to this region, was not found to be mutated in these cases demonstrating LOH. In vivo experiments suggested that this gene could be silenced by aberrant methylation. In summary, MI was associated with high grade lesions, whereas LOH at 16q was observed at similar frequencies in all the carcinomas, possibly reflecting different roles in the development and progression of breast cancer.