The classification and grading of papillary urothelial neoplasms has been a long-standing subject of controversy. Previously, numerous diverse grading schemes for bladder tumor, including the 1973 World Health Organization (WHO) classification, existed whereby one of the major limitations was poor inter-observer reproducibility among pathologists. The WHO/International Society of Urological Pathology (ISUP) consensus classification system of urothelial neoplasms of the urinary bladder was developed in 1998 and was revised most recently in 2003 (published in 2004). Importantly, the current classification system provides detailed histological criteria for papillary urothelial lesions and allows for designation of a lesion (papillary urothelial neoplasm of low malignant potential) with a negligible risk of progression. Thus, the latest system is designed to be a universally acceptable one for bladder tumors that not only could be effectively used by pathologists, urologists, and oncologists, but also stratifies the tumors into prognostically significant categories. This article outlines the 2004 WHO/ISUP classification system regarding the specific histological criteria for non-invasive papillary urothelial neoplasms and the clinical significance of each category.