Well-differentiated liposarcoma (WDL)/atypical lipomatous tumor and dedifferentiated liposarcoma (DDL) together comprise the largest subgroup of liposarcomas, and constitute a histologic and behavioral spectrum of one disease. WDL and DDL typically occur in middle-aged to older adults, particularly within the retroperitoneum or extremities. WDL closely resembles mature adipose tissue, but typically shows fibrous septation with variable nuclear atypia and enlargement. WDL does not metastasize, but can dedifferentiate to DDL, which is associated with more aggressive clinical behavior, with a greater propensity for local recurrence and the capacity for metastasis. Although distant metastasis is rarer in DDL compared with other pleomorphic sarcomas, behavior is related to location, with a significantly worse outcome in retroperitoneal tumors. DDL typically has the appearance of undifferentiated pleomorphic or spindle cell sarcoma, and is usually a non-lipogenic sarcoma that is adjacent to WDL, occurs as a recurrence of WDL or which can arise de novo. WDL and DDL share similar background genetic aberrations; both are associated with high-level amplifications in the chromosomal 12q13-15 region, which includes the CDK4 and MDM2 cell cycle oncogenes. In addition, DDL harbor further genetic changes, particularly 6q23 and 1p32 coamplifications. While surgical excision remains the treatment mainstay with limited medical options for patients with aggressive recurrent disease or metastases, novel targeted therapies towards the gene products of chromosome 12 are being evaluated. This review summarizes the pathology of WDL and DDL, discussing morphology, immunohistochemistry, genetics and the differential diagnosis.