When a single sublethal dose (300 mglkg body weight) of cyclophosphamide was injected intraperitoneally into experimental mice, several morphological alterations were detected in the crypt epithelium within a few hours. These were (a) mitotic activity of epithelial cells decreased, reaching the lowest level a t 16 hours; (b) an abnormally high number of lymphocytes and cells with eosinophilic granules appeared in the epithelium; later these cells degenerated and the maximum number of dead cells was observed a t six hours after the drug injection. At four days post-injection the morphology of crypt epithelium had returned to normal.Electron microscopic examination revealed that although the mitotic activity of crypt epithelial cells was depressed, there was little change in their morphology following the drug administration. However, many intermediate stages of degeneration of lymphocytes and eosinophilic cells were observed in the intercellular spaces as well as apparently inside the cytoplasm of crypt epithelial cells. The eosinophilic cells are characterized by the presence of large crystal-containing granules in the cytoplasm, and are believed to be equivalent to "globular leucocytes" described by many investigators. Evidence from this study suggests that lymphocytes and globular leucocytes are more sensitive to cyclophosphamide than crypt epithelial cells, and that they degenerate in crypt epithelium.