1. The number of nuclei found in the hyphal cells was found to vary between 1 and 36, with a mean at 6.44±0.08. In contrast with this variability the cells of the hymenium were always found to be initially binucleate. This reduction in nuclear number in the hymenial tissue is attributed to a number of factors. 2. Evidence for the heterozygous nature of the fusion nucleus was obtained from a study of chromosome bridges at Anaphase I and II of meiosis. This accords with the genetical results of other investigators who have shown that segregation of a number of factors occurs at meiosis. 3. Clamp connections and conjugate mitotic spindles were not observed although nuclear migration between cells was found to occur. It is suggested that this migration may provide an opportunity for maintaining a genetic balance between cells. 4. It was found that the resting nuclei could attain one of two resting conditions, the expanded or the homogeneous state, which were characterised by differences in staining affinity. It was shown that the different resting states were not the result of genetical differences between nuclei and did not represent different stages of the mitotic cycle. From observations on the development of the young basidium and on the distribution of these two nuclear types, it is suggested that the difference between the resting nuclei is primarily associated with a difference in cellular activity, the homogeneous resting nuclei characterising cells in active metabolic states. 5. The haploid chromosome number was found to be n = 12, a determination which differs from previously recorded numbers, and the 24 chromosomes of the fusion nucleus regularly formed 12 bivalents at meiosis. The presence of laggard chromosomes at meiosis and mitosis was attributed to sticky adhesions between heterochromatic regions of the chromosomes. 6. Contrary to the reports of previous investigators, centrosomes were not observed at meiosis or mitosis. Observations made on other Basidiomycetes and reports by other investigators suggest that the absence of centrosomes may be a characteristic of the group. 7. Differences in the manner of alignment of the spindles at the second division of meiosis were found between basidia. It was shown that the nuclear constitution of the basidiospores depended upon the type of spindle alignment, and a bias towards the production of spores containing non-sister nuclei was found. It is pointed out that the production of an excess of spores containing non-sister nuclei serves to maintain a high degree of heterokaryosis without involving nuclear exchange between plants.