In one of my previous posts, I have shown how we can implement dependent lookups in CRM 4. Fortunately, CRM 2011 has improved in this area and now we can implement this functionality with minimum effort. For the demo purpose I will use the same scenario which I used for CRM 4. If you have not read my earlier post, I suggest to go and read it so that you are aware of the scenario. In fact, you want be able to understand this post as I am basing this post on that.
As usual, lets consider the two lookup fields, Expense Category and Expense Type where expense type is depending on expense category.
Figure 1: Expense categories & types
As usual, we will add these two as lookup fields on another entity (e.g. Expense Claim).