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We studied 155 cases of dedifferentiated liposarcoma to define its clinicopathologic features and behavior, in particular how the extent and grade of dedifferentiation affected outcome. Tumors occurred in late adult life (median, 61.5 years; range, 21-92 years), most commonly in the retroperitoneum (106 cases), extremities and trunk (32 cases), and scrotum/spermatic cord (13 cases). The majority of dedifferentiated liposarcomas presented as de novo lesions, whereas the remainder developed as a late complication of a preexisting well-differentiated liposarcoma after an average interval of 7.7 years. At the time of presentation, most of the dedifferentiated liposarcomas displayed extensive areas of high-grade dedifferentiation resembling malignant fibrous histiocytoma or high-grade fibrosarcoma, whereas a minority contained only areas of low-grade dedifferentiation resembling fibromatosis or well-differentiated fibrosarcoma. Divergent myosarcomatous or osteosarcomatous differentiation was observed focally in six cases. The behavior of dedifferentiated liposarcomas was that of a high-grade sarcoma with a local recurrence rate of 41%, a metastatic rate of 17%, and disease-related mortality of 28%. The most important prognostic factor was location in that retroperitoneal tumors had significantly worse survival than those in other sites. Tumors were divided into those having less than or those with more than 25% dedifferentiation, and dedifferentiated zones were classified into low grade or high grade. Neither low-grade dedifferentiation nor a low percentage of dedifferentiation was associated with an improved outcome for the tumors examined in this study; however, in no cases was the absolute size of the dedifferentiated focus <2 cm. Therefore, this study did not determine a minimum, or threshold, amount of dedifferentiation below which outcome was more favorable. The behavior of liposarcomas in which the dedifferentiated component was entirely low grade was more similar to that of traditional dedifferentiated liposarcoma than to that of well-dedifferentiated liposarcoma. Our study supports the expansion of the definition of dedifferentiated liposarcoma to include tumors with low-grade dedifferentiation and also suggests that low-grade dedifferentiation represents a precursor lesion of high-grade dedifferentiation.