Following the intravenous injection of complete Freund's adjuvant, changes in the rat lung were studied with the electron microscope. Interstitial granulomas were produced and whereas on light microscopy these appeared to consist mainly of epitheloid cells, electron microscopy showed that the granulomas were largely made up of macrophages. Epithelioid cells were in fact few in number, atypical in appearance and limited to the periphery of some granulomas. Fenestrated capillaries were also found at the edge of the granulomas. The alveolar macrophages were increased in number and size but marked cytoplasmic vacuolation and a paucity of lysosomes are consistent with our previous suggestion that the phagocytic and migratory properties of these cells are weakened or inhibited. Alterations were found in both types of alveolar epithelial cell with the appearance of intermediate cell forms.