Anal cancer may be preceded by anal squamous intraepithelial lesions (ASIL), but the natural history of ASIL is poorly understood. In this report, we characterize the 2-year incidence and progression of low-grade SIL (LSIL) and high-grade SIL (HSIL) in a cohort study in 346 HIV-positive and 262 HIV-negative homosexual or bisexual men. Subjects were studied at defined intervals using anal cytology, anoscopy with biopsy of visible lesions, human papillomavirus (HPV) testing, HIV serostatus, CD4 level, and data on medical history and lifestyle. The incidence of HSIL within 2 years was 20% in HIV-positive men and 8% in HIV-negative men who were normal at baseline. In total, 62% of HIV-positive and 36% of HIV-negative men with LSIL at baseline progressed to HSIL. The relative risk (RR) for anal disease progression in HIV-positive men was 2.4 (95% confidence interval [CI], 1.8-3.2) when compared with HIV-negative men. The RR increased to 3.1 (95% CI, 2.3-4.1) in HIV-positive men with CD4 counts <200/mm3. Infection with multiple HPV types was a risk factor for anal disease progression in both HIV-positive (RR = 2.0; 95% CI, 1.0-4.1) and HIV-negative (RR = 5.1; 95% CI, 2.3-11) men. The incidence of anal HSIL and progression of LSIL to HSIL within 2 years of follow-up is high in HIV-positive homosexual or bisexual men and to a lesser extent, in HIV-negative men. Men with the above risk factors may be at increased risk of developing anal cancer.