Colorectal cancer (CRC) is the most feared long-term complication in patients with ulcerative colitis (UC) and Crohn's colitis. Surveillance by colonoscopy and serial biopsy is conducted to identify patients most likely to benefit from potentially curative surgery. Within this paradigm, patients with high grade dysplasia or early stage CRC typically undergo colectomy, while patients free of dysplasia continue within surveillance programmes. However, detection of dysplasia in colitis may be difficult. Underdiagnosis and undertreatment of dysplasia may be accompanied by 'interval cancers' after apparently negative colonoscopy, frustrating the goal of cancer prevention. In the absence of a best practice model, surgical decisions for effective cancer prevention and control can be aided by greater understanding of cancer biology, in particular the close relationship between processes of inflammation and neoplastic change. This review will summarise recent knowledge in this area and consider clinical variables of disease duration, severity and anti-inflammatory therapy against stepwise events of neoplastic transformation. Against this background, indications for surveillance and prophylactic colectomy in specific clinical situations will be discussed.