Follicular lymphoma (FL) is an indolent, B-cell, non-Hodgkin's lymphoma with varying cytological appearance and clinical behavior. The genetic hallmark of FL is the t(14;18) translocation, and as a germinal center derived entity it is also characterized by somatic hypermutation of the immunoglobulin heavy chain (IgH) gene. In an attempt to correlate this molecular signature with the cytological grading of FL, we have analyzed the IgH variable (IgV H), regions in all cytological grades of FL. Four FL cases showing t(14;18) translocation were classified into grade I-III categories according to the current WHO guidelines. The IgV H gene segments were PCR-amplified, sequenced, and compared to their respective germline IgV H sequences. The neoplastic cells of grade I and II FLs revealed clonally related, but highly divergent IgV H gene sequences indicating the ongoing nature of somatic hypermutation. Grade III FL also showed extensive presence of somatic hypermutation, but these mutations were not associated with intraclonal divergence. Thus, these results suggest that grade I-II and grade III FL may represent different biological entities. The presence of ongoing somatic hypermutation of IgV H sequences in grade I and II FLs is compatible with direct follicular origin of these tumor cells, contrasting the homogenous, stable clones of grade III FL resembling a post-follicular stage of B-cell development. Our findings demonstrate that contrary to the three tiered cytological grading, molecular features of IgH genes classify FL into two distinct subcategories. These studies also suggest that with progression FL gains post-follicularlike molecular features and becomes independent of the germinal center microenvironment.