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Seventy-three cases of malignant, atypical, and multicentric granular cell tumors of soft tissue were studied to clarify criteria for malignancy and prognostic factors. Six histologic criteria were assessed: necrosis, spindling, vesicular nuclei with large nucleoli, increased mitotic activity (> 2 mitoses/10 high-power fields at 200× magnification), high nuclear to cytoplasmic (N:C) ratio, and pleomorphism. Neoplasms that met three or more of these criteria were classified as histologically malignant; those that met one or two criteria were classified as atypical; and those that displayed only focal pleomorphism but fulfilled none of the other criteria were classified as benign. Hence, 46 cases were classified as histologically malignant, 21 as atypical (3 were multicentric), and 6 as benign (all were multicentric). The patients with benign multicentric and atypical granular cell tumors had no metastases and there were no tumor deaths. In contrast, 11 of 28 patients (39%) with malignant granular cell tumor with follow-up information died of disease at a median interval of 3 years; 8 of 28 (29%) were alive with disease, and 9/28 (32%) were disease free (median intervals, 2 and 7 years, respectively). There were local recurrences in 9 of 28 malignant cases (32%) and metastases in 14 of 28 (50%) (median intervals, each 2 years). Forty-eight cases were studied immunohistochemically; 100% expressed vimentin, 98% S-100 protein, 98% neuron-specific enolase, 69% CD57, and 65% CD68. Alpha-smooth muscle actin, desmin, epithelial membrane antigen (EMA), cytokeratins (with CAM 5.2 and KL-1), chromogranin, and HMB45 were not detected. The proliferative index with Ki67 (MIB1) was 10-50% in 14 of 25 malignant tumors (56%), and immunostaining for p53 was detected in 50% or more of tumor cells in 17 of 25 (68%); both of these factors were statistically significant with regard to the histologic classification as benign, atypical, or malignant. Ultrastructural examination of 13 benign, atypical, and malignant granular cell tumors showed engorgement of the cytoplasm with complex granules and lysosomes, as well as Schwannian features. By flow cytometric DNA analysis, two of six malignant tumors were aneuploid, two were hyperdiploid, and two were diploid. One atypical tumor was aneuploid and all 11 benign tumors were either diploid (9 cases) or hyperdiploid (2 cases). Statistically significant adverse prognostic factors with regard to survival included local recurrence, metastasis, larger tumor size, older patient age, histologic classification as malignant, presence of necrosis, increased mitotic activity, spindling of tumor cells, vesicular nuclei with large nucleoli, and Ki67 values less than 10%. This study defines clinical and morphologic criteria for malignancy in granular cell tumors and shows that malignant granular cell tumor is a high-grade sarcoma with a high rate of metastases and a short survival.