Glutaraldehyde-perfused lungs of 5 adult male and female goats were prepared for electron microscopy to study the properties of blood monocytes in the alveolar capillaries, with particular reference to intravascular erythrophagocytosis. Ultrastructural evidence is presented that the majority of intravascular monocytes were active in forming large uropods and filipods and were vigorously phagocytic for erythrocytes. Erythrocytes were engulfed intact and subsequently fragmented. The fragments were hemolysed and eventually converted into ghost erythrocytes and siderosomes. An electron-dense protein coat was consistently seen on the outer surface of the cell membrane of monocytes. Coated pits, endocytosis and some indication of internalization of the surface coat were evident. It is suggested that blood monocytes in the lung undergo a process of maturation to differentiate into active phagocytes as immediate precursors of alveolar macrophages.