The nature of intracytoplasmic lipid inclusions found in cultured rabbit and rat peritoneal mesothelial cells was examined by ultrastructural and biochemical techniques. Transmission electron microscopy also demonstrated extracellular release of these lipid bodies. Differential fixation with tannic acid revealed 2 types of inclusions, lamellated (lamellar bodies) and nonlamellated (homogeneous). The lamellar bodies were found near or in the Golgi apparatus and on the cell surface where occasionally they were observed in exocytotic pouches. The homogeneous inclusions were the predominant species being found primarily intracellularly. Lipid bodies obtained from the culture media over the cells displayed on electron microscopy the same morphological characteristics as those seen intracellularly. Exposure of confluent cultures of mesothelial cells to the vital lipid stain Nile Red caused the appearance of intensely fluorescent droplets in or on the cells at wave lengths consistent with staining for phosphatidylcholine-rich vesicles. Incubation of the cells with r4C)-choline an d subsequent analysis of phospholipid formation revealed high rates of r4C)-phosphatidylcholine addition to both intra and extracellular lipid pools. Taken together, mesothelial cells exhibit lipid bodies similar in ultrastructure to the surfactant containing organelles of Type II pneumocytes.