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Orthorhombic aragonitic crystals, embedded with a granular lipo-protein matrix and surrounded by a trilaminar membrane, are localized in the apical cytoplasm of epidermal cells of Scleractinian corals. Adult specimens of Astrangia danae (Agassiz) and settled planulae of Porites porites (Pallas) contain crystals averaging 0.7 mu by 0.1 mu by 0.3 mu within Golgi-derived vesicles. Short-term labelling with 45Ca reveals distribution of radioactivity amont a basic tissue fraction (92%) an acid tissue fraction (5%) and a skeletal fraction (3%). Identification of the primordial crystal population within membrane-bound visicles provides overwhelming evidence for the intracellular mode of calcification in Scleractinia. Moreover, it permits development of a novel concept of cellular regulation over these dynamic events. The membrane-bound vesicel is a miniature crystal fabrication station and a vehicle responsible for transportation of seed crystals and an organic matrix material to sites of discharge from the cell. The vesicle membrane becomes a probable locus of active transport and enzymatic activity as well as a physical barrier to be penetrated for release of vesicle contents into the extracellular milieu. Contact between the vesicle membrane and the plasmalemma would result in exocytosis and the onset of skeletogenesis. Principles governing crystal growth would prevail from then on. The released crystal becomes a nucleation catalyst and the organic matrix, a supply of ionic calcium for self-limiting crystallization. Crystals are produced by the organism spontaneously and continuously from shortly after larval attachment throughout the life of the polyp. Therefore, these membrane-bound vesicles signal the dynamic process by which initiation, differentiation, growth and limitation of the coral skeleton is regulated.