Abstract. Lugol's iodine staining (Lugol-staining) has been widely used to detect malignant changes in the cervix uteri and esophagus. However, pathological and histochemical changes in the border between Lugol-stained and -unstained areas in oral epithelial dysplastia and malignant lesions are not well understood. We examined the histological appearance of 20 cases of epithelial dysplasia surrounding squamous cell carcinoma using HE and PAS staining in the borders between Lugol-stained and -unstained areas. Subsequently, differences in the expression of cytokeratin 13 (CK13), an epithelium differentiation marker, and Ki-67, a cell proliferative marker, in those areas were investigated by immunohistochemistry. Lugol-stained areas of all cases showed mild dysplasia or normal epithelium appearance, while Lugol-unstained areas in most cases were diagnosed as moderate/severe dysplasia and carcinoma in situ. PAS reactions were limited or not found in the Lugol-unstained areas as compared to intense positivity in Lugol-stained areas. CK13 and Ki-67 protein expression was significantly different between Lugol-stained and -unstained areas. It was confirmed that epithelia showing precancerous or cancerous features were detected as Lugol-unstained boundary areas. A reduction in glycogen production caused by alterations of cell differentiation and proliferation associated with malignant changes may result in a lack of Lugol-staining.