Electron microscopic examinations have been made on 32 early human placentas, seven of which ranged from 7 to 11 weeks menstrual age. In avascular villi, well developed basal laminae separate the trophoblast from their connective tissue cores. At such stages, only undifferentiated mesenchymal cells occur in the stroma. Vessels develop by attachment of two or more of the mesenchymal cells to each other by localized desmosomal contacts, thus forming a real or potential capillary lumen between their apposed plasma membranes. Other mesenchymal cells approach these primitive tubes, enclasp them as pericytes, and thrust processes between adjacent endothelial cells at their attachment points. The capillary enlarges, therefore, by incorporation of mesenchymal pericytes between adjacent endothelia. Mitoses occur in the pericytes but not in early endothelial cells. Hofbauer cells differentiate in the stroma concomitantly with the appearance of capillaries.