T1 papillary urothelial carcinomas of the urinary bladder run a variable clinical course, and an effective substaging system has not been defined yet. This study was conducted to devise an easy-to-use substaging method and to validate its prognostic value in T1 cancer on transurethral resection specimens. A total of 103 cases of T1 low-grade papillary urothelial carcinoma and 406 cases of T1 high-grade papillary urothelial carcinoma from a series of 1515 non-muscle–invasive bladder tumors treated by transurethral resection were studied. Substaging was performed using 0.5, 1.0, and 1.5 mm as thresholds to distinguish extensive from focal invasion. Correlations to recurrence, progression, cancer-specific mortality, and all-cause mortality were explored and compared with Ta tumors. All lamina propria invasions in low-grade papillary urothelial carcinomas were confined to 1.0 mm. The proportions of T1 high-grade papillary urothelial carcinoma invading beyond 0.5, 1.0 (T1>1 mm), and 1.5 mm were 53%, 32%, and 27%, respectively. No prognostic differences were found between Ta and T1 low-grade papillary urothelial carcinomas. T1>1 mm high-grade papillary urothelial carcinomas were associated with significantly greater risks for recurrence, progression, cancer-specific mortality, and all-cause mortality compared with T1≤1 mm and Ta tumors. Comparable statistical results could be obtained using 0.5 and 1.5 mm as cutoff points, but we recommend using 1.0 mm for practical consideration. Taking all non-muscle–invasive urothelial neoplasms of the bladder into consideration, 5 prognostically distinct categories can be established: (1) papillary urothelial neoplasms of low malignant potential; (2) low-grade papillary urothelial carcinoma Ta/1; (3) high-grade papillary urothelial carcinoma Ta; (4) high-grade papillary urothelial carcinoma T1≤1 mm; and (5) high-grade papillary urothelial carcinoma T1>1 mm. Our study demonstrates that the substaging of T1 bladder cancer is feasible, based on the evaluation of transurethral resection specimens, and can provide more precise prognostic information to identify a subset of patients with a more unfavorable prognosis.