Background Epithelial cells show varying degrees of cytologic atypia in dogs with nonmalignant lesions (NML) and carcinomas (ubC) of the bladder, making histopathologic examination necessary for a definitive diagnosis. Objectives This study aimed to investigate the diagnostic performance of squash preparation cytology and identify several cytomorphologic features of ubC to assist in diagnoses. Methods Squash preparations were made and reviewed in dogs that underwent transurethral cystoscopy. The results were compared with histopathologic diagnoses. Two cytopathologists performed blinded assessments using a scoring system established for 11 cytologic features, including the presence of macronuclei, abnormal nucleoli, atypical mitoses, signet ring cells, multinucleated cells, nuclear molding, anisokaryosis, cytoplasmatic microvacuolization, cell arrangements, and neutrophil and lymphocyte infiltrations. Based on cytologic and histopathologic diagnoses, dogs were divided into ubC and NML groups. Associations between cytologic and histopathologic diagnoses were investigated, and agreement between the cytopathologists was calculated. Cytologic features were analyzed with multivariate logistic regression models. The performance of predictors in the final model was evaluated in terms of Sensitivity (Se), Specificity (Sp), accuracy, positive predictive value (PPV), negative predictive value (NPV), likelihood ratio positive (LR+), and negative (LR‐) values, and the diagnostic odds ratio (DOR). Results Forty‐four dogs diagnosed with ubC, and 17 with NML were included in the study. Cytologic and histopathologic diagnoses were significantly associated with each cytopathologist. There was an almost perfect agreement between cytopathologists (κ = 0.88). The absence of neutrophilic infiltration, the presence of multinucleated cells, and nuclear molding were associated with ubC; using a combination of these features in parallel testing resulted in Se = 0.98, Sp = 0.65, accuracy = 0.89, PPV = 0.88, NPV = 0.92, LR + =2.77, LR‐ = 0.04, and DOR = 7.7. Conclusions Squash preparation cytology could be a reliable technique to diagnose ubC in dogs. The best diagnostic combination was the absence of neutrophilic infiltration, multinucleated cells, and nuclear molding.