Bladder cancer is a relatively common and potentially life-threatening neoplasm. The diagnosis of urothelial carcinoma usually entails a lifelong surveillance to detect recurrent disease. In recent years, significant progress has been made in understanding the molecular mechanisms of carcinogenesis in urinary bladder. An early step in the process of carcinoma development is establishment of a premalignant abnormal urothelial patch that may give rise to various types of urothelial carcinoma and may provide a fertile ground for development of multifocal synchronous and metachronous tumors. Two distinct molecular pathways are involved. Low-grade papillary carcinoma is associated with mutation in the FGFR3 or in some cases mutations in RAS genes. High-grade in situ/muscle-invasive carcinoma on the other hand is characterized by alteration of p53 and pRB. Loss of function of these key genes, which play a crucial role in the control of cell cycle, leads to accumulation of additional mutations and deletions of genes resulting in an aggressive phenotype. It is hoped that a thorough understanding of the molecular basis of urothelial cancer will facilitate early diagnosis and will lead to development of new modalities for the management and treatment of these carcinomas.