This study investigates by electron microscopy the transformational process of the endosomal compartment of the Drosophila nephrocyte, the garland cell, which occurs during endocytotic processing of internalized material. The endosomal compartment of the garland cell consists of a prominent tubular/vacuolar complex in the cortical cytoplasm. When internalization of coated pits is blocked at 29 degrees C using the endocytosis mutant, shibire(ts), the tubules gradually disappear after 7 min at 29 degrees C. By 12 min at 29 degrees C, the vacuoles also disappear. Thus, the endosomal compartment appears to constantly undergo a transformational process that necessitates continuous replenishment by coated vesicles. The data suggest that the tubular component of the endosomal compartment gradually transforms into vacuoles by the expansion of the tubular membrane. The vacuoles then transform by invaginating into themselves, creating flattened cisternae. The electron-lucent substance in the lumina of the vacuoles appears to be extruded into the cytoplasm through the invaginating membrane. No shuttle vehicles such as vesicles or tubules could be identified that might have been involved in the transporting of endocytosed materials and membrane from the endosomal compartment to lysosomes or back to the plasma membrane.