Sterile pith cultures of Nicotiana tabacum have been induced to form localized regions of differentiating tracheids. These localized regions have been examined by phase, fluorescence, and electron microscopy, and polarization optics. Fixation for electron microscopy was with glutaraldehyde-osmium. The differentiating tracheids develop characteristic thick cell walls which are eventually lignified. The lignifications appear to be uniform throughout the secondary wall and little or no lignin appears to be deposited in the primary walls or intercellular layer. At all stages of secondary wall deposition, the peripheral cytoplasm contains a system of microtubules which form a pattern similar to that of the developing thickenings. Within this system the microtubules are oriented, the direction of orientation mirroring that of the fibrils in the most recently deposited parts of the wall. The observations support the view that the microtubules are somehow involved in microfibril orientation. The microtubules appear to be attached to the plasma membrane which has a triple layered structure. The two electron dense layers of the plasma membrane have a particulate structure. In the differentiating tracheids at regions where secondary wall thickening has not yet been deposited numerous invaginations of the plasma membrane are observed which contain loosely organized fibrillar material. It is suggested that these are areas of localized activity of the plasma membrane and that the enzymes concerned with the final organization of the cellulose microfibrils are situated at the surface of the plasma membrane. Dictyosomes in the differentiation cells give rise to vesicles which contain fibrous material and the contents are incorporated into the cell wall. Numerous profiles characteristic of plasmodesmata are evident in sections of the secondary thickenings.