This paper describes the results of an ultrastructural study on the subcellular events occurring in nematode-infecting (trophic) hyphae of the nematophagous fungus Arthrobotrys oligospora. In early stages of the infection process (30 min-4 h), the infection bulb and developing trophic hyphae are characterized by a highly proliferated endoplasmic reticulum (ER). Its membranes often appeared vesiculated and occur in close association with the cell membrane of the cells. Upon further invasion of the nematode, lipid droplets developed in the trophic hyphae; these droplets were first observed 4-5 h after the infection but were abundantly present after 24-36 h. Along with the formation of lipid droplets proliferation of microbodies was observed. These organeles were characterized by the presence of catalase and thiolase and were frequently observed in close association with the lipid droplets. Later on the lipid droplets disappeared. During this period new vegetative mycelium developed from the trap that had originally captured the nematode. Our results suggest that part of the nutrients released from the nematode are first converted into lipids by the fungus which in turn are degraded via the beta-oxidation pathway and further metabolized to support growth of new vegetative hyphae.