Exocrine dermal glands, comparable to the class 3 glandular units of insects, are found in the gills of the grass shrimp, Palaemonetes pugio. The dermal glands are composed of three cells: secretory cell, hillock cell and canal cell. Originating as a complex invagination of the apical cytoplasm of the granular secretory cell, a duct ascends through the hillock and canal cells to the cuticular surface. The duct is divisible into four regions: the secretory apparatus in the granular secretory cell, the locular complex, the hillock region within the hillock cell and the canal within the canal cell. A tubular ductule is contained within the latter two regions. As the ductule ascends to the cuticular surface, its constitution gradually changes from one of a fibrous material to one which possesses layers of epicuticle. During the proecdysial period, the ductule is extruded into the ecdysial space and this is followed by the secretion of a new ductule. Temporary ciliary structures, located near the secretory apparatus of the secretory cell, are associated with the extrusion and reformation of the ductule. Characterized only by a basal body and rootlets throughout most of the intermolt cycle, the ciliary organelles give rise to temporary axonemic processes which ascend through the ductule toward the ecdysial space at the onset of proecdysis. Subsequently, the old ductule is sloughed off and a new ductule is reformed around the ciliary axonemes. Following this reformation, the ciliary axonemes degenerate. The function of cytoplasmic processes, derived from the apical cytoplasm of the secretory cell, is also discussed.