Cancer of the urinary bladder is the second most common malignancy of the genitourinary tract, currently accounting for up to 5% of all newly diagnosed tumours in the western world. Urinary bladder carcinogenesis seems to develop from the interaction of environmental exposure and genetic susceptibility. Smoking, specific industrial chemicals, dietary nitrates and arsenic represent the most important exogenous risk factors. Chromosomal abnormalities, silencing of certain genes by abnormal methylation of their promoter region, alterations in tumour suppressor genes and proto-oncogenes that induce uncontrolled cell proliferation and reduced apoptosis, are molecular mechanisms that have been reported in bladder carcinogenesis. In this article, we discuss the environmental risk factors of bladder cancer and we review the genetic and epigenetic alterations, including aberrant DNA methylation and deregulation of microRNAs expression. We also discuss the role of p53 and retinoblastoma suppressor genes in disease progression. Finally, we present recent reports on the use of molecular profiling to predict disease stage and grade and direct targeted therapy.