Background & Aims: Patients with inflammatory bowel disease (IBD) and primary sclerosing cholangitis (PSC, termed PSC-IBD) are at increased risk for colorectal cancer, but their risk following a diagnosis of low-grade dysplasia (LGD) is not well described. We aimed to determine the rate of advanced colorectal neoplasia (aCRN), defined as high-grade dysplasia and/or colorectal cancer, following a diagnosis of indefinite dysplasia or LGD in this population. Methods: We performed a retrospective, longitudinal study of 1911 patients with colonic IBD (293 with PSC and 1618 without PSC) who underwent more than 2 surveillance colonoscopies from 2000 through 2015 in The Netherlands or the United States (9265 patient-years of follow-up evaluation). We collected data on clinical and demographic features of patients, as well as data from each surveillance colonoscopy and histologic report. For each surveillance colonoscopy, the severity of active inflammation was documented. The primary outcome was a diagnosis of aCRN during follow-up evaluation. We also investigated factors associated with aCRN in patients with or without a prior diagnosis of indefinite dysplasia or LGD. Results: Patients with PSC-IBD had a 2-fold higher risk of developing aCRN than patients with non-PSC IBD. Mean inflammation scores did not differ significantly between patients with PSC-IBD (0.55) vs patients with non-PSC IBD (0.56) (P =.89), nor did proportions of patients with LGD (21% of patients with PSC-IBD vs 18% of patients with non-PSC IBD) differ significantly (P =.37). However, the rate of aCRN following a diagnosis of LGD was significantly higher in patients with PSC-IBD (8.4 per 100 patient-years) than patients with non-PSC IBD (3.0 per 100 patient-years; P =.01). PSC (adjusted hazard ratio [aHR], 2.01; 95% CI, 1.09–3.71), increasing age (aHR 1.03; 95% CI, 1.01–1.05), and active inflammation (aHR, 2.39; 95% CI, 1.63–3.49) were independent risk factors for aCRN. Dysplasia was more often endoscopically invisible in patients with PSC-IBD than in patients with non-PSC IBD. Conclusions: In a longitudinal study of almost 2000 patients with colonic IBD, PSC remained a strong independent risk factor for aCRN. Once LGD is detected, aCRN develops at a higher rate in patients with PSC and is more often endoscopically invisible than in patients with only IBD. Our findings support recommendations for careful annual colonoscopic surveillance for patients with IBD and PSC, and consideration of colectomy once LGD is detected.