FGFR3 is frequently activated by mutation in urothelial carcinoma (UC) and represents a potential target for therapy. In multiple myeloma, both over‐expression and mutation of FGFR3 contribute to tumour development. To define the population of UC patients who may benefit from FGFR‐targeted therapy, we assessed both mutation and receptor over‐expression in primary UCs from a population of new patients. Manual or laser capture microdissection was used to isolate pure tumour cell populations. Where present, non‐invasive and invasive components in the same section were microdissected. A screen of the region of the highest tumour stage in each sample yielded a mutation frequency of 42%. Mutations comprised 61 single and five double mutations, all in hotspot codons previously identified in UC. There was a significant association of mutation with low tumour grade and stage. Subsequently, non‐invasive areas from the 43 tumours with both non‐invasive and invasive components were analysed separately; 18 of these had mutation in at least one region, including nine with mutation in all regions examined, eight with mutation in only the non‐invasive component and one with different mutations in different regions. Of the eight with mutation in only the non‐invasive component, six were predicted to represent a single tumour and two showed morphological dissimilarity of fragments within the block, indicating the possible presence of distinct tumour clones. Immunohistochemistry showed over‐expression of FGFR3 protein in many tumours compared to normal bladder and ureteric controls. Increased expression was associated with mutation (85% of mutant tumours showed high‐level expression). Overall, 42% of tumours with no detectable mutation showed over‐expression, including many muscle‐invasive tumours. This may represent a non‐mutant subset of tumours in which FGFR3 signalling contributes to the transformed phenotype and which may benefit from FGFR‐targeted therapies. Copyright © 2007 Pathological Society of Great Britain and Ireland. Published by John Wiley & Sons, Ltd.