Population-based data on the epidemiology of vulvar lichen sclerosus (LS) are sparse and only few prospective studies have investigated the malignant potential of the disease. We used the nationwide Danish Pathology Registry to first assess the incidence of biopsy-verified vulvar LS in the period 1997–2022 and second to examine the incidence of vulvar high-grade squamous precancer and squamous cell carcinoma (SCC) in women with biopsy-verified vulvar LS (1978–2019) compared with that expected in the general female population. For the latter aim, we computed standardized incidence ratios (SIRs) with 95% confidence intervals (CIs). During our study period, the age-standardized incidence rate of vulvar LS increased from 5.0 (1997–1998) to 35.7 (2021–2022) per 100,000 person-years. Compared with the general female population, women with biopsy-verified vulvar LS had significantly increased rates of vulvar high-grade squamous precancer (SIR = 8.5; 95% CI: 7.2–10.0) and SCC (SIR = 16.2; 95% CI: 14.2–18.4). The SIRs of vulvar high-grade squamous precancer and SCC did not vary substantially according to length of follow-up. This nationwide and population-based study shows a 7-fold increase in the incidence of biopsy-verified vulvar LS since 1997. Data also show that women with biopsy-verified vulvar LS have 8.5 and 16 times higher than expected incidence of vulvar high-grade squamous precancer and SCC, respectively. The substantially increased incidence of vulvar high-grade squamous precancer and SCC following LS is important in relation to the clinical management and follow-up of LS patients.