Liposarcoma is a malignant neoplasm of fat tissue. Well-differentiated and dedifferentiated liposarcoma (WDL/DDL) represent the two most clinically observed histotypes occurring in middle-aged to older adults, particularly within the retroperitoneum or extremities. WDL/DDL are thought to represent the broad spectrum of one disease, as they are both associated with the amplification in the chromosomal 12q13-15 region that causes MDM2 and CDK4 overexpression, the most useful predictor for liposarcoma diagnosis. In comparison to WDL, DDL contains additional genetic abnormalities, principally coamplifications of 1p32 and 6q23, that increase recurrence and metastatic rate. In this review, we discuss the xenograft and transgenic animal models generated for studying progression of WDL/DDL, highlighting utilities and pitfalls in such approaches that can facilitate or impede the development of new therapies.