Gene expression profiling between normal B cells/plasma cells and multiple myeloma cells revealed four distinct subgroups of multiple myeloma plasma cells that have significant correlation with clinical characteristics known to be associated with poor prognosis. Diagnosis for multiple myeloma (and possibly monoclonal gammopathy of undetermined significance) based on differential expression of 14 genes, as well as prognostics for the four subgroups of multiple myeloma based on the expression of 24 genes were also established. Gene expression profiling also allows placing multiple myeloma into a developmental schema parallel to that of normal plasma cell differentiation. The development of a gene expression- or developmental stage-based classification system for multiple myeloma would lead to rational design of more accurate and sensitive diagnostics, prognostics and tumor-specific therapies for multiple myeloma.