There is substantial evidence for the existence of mutually exclusive molecular pathways to tumorigenesis, in the formation of papillary and invasive carcinomas, respectively. The most common genetic alterations in low grade papillary transitional-cell carcinoma (TCC) are loss of heterozygosity of part or all of chromosome 9 and activating mutations of the fibroblast growth factor receptor 3 (FGFR3). The pathway to development of invasive TCC seems to start with dysplasia, progress to carcinoma in situ, followed by invasion of the lamina propria. The most frequent genetic alteration in dysplasia and carcinoma in situ is mutation of TP53, followed by loss of heterozygosity of chromosome 9. A marker for progression in TCC is loss of chromosome 8p, which occurs in approximately 60% of bladder tumors. Global trends of increased genomic instability and aberrant methylation of cytosine residues in DNA correlate with increased tumor invasion and progression. When researching markers of bladder cancer for clinical use, it is important that biomedical pathways and their alterations are measured in the same tumor populations. This review examines the published data and proposes a model for the mechanisms behind bladder cancer development.