The granulosa and the luteal cells have been studied in the ovary of the adult laying hen by histochemistry, autoradiography, polarized light and electron microscopy. It is concluded that the granulosa cells are specialized for the synthesis of proteins, whereas the luteal cells mainly secrete steroids. These conclusions have been tested by examining the cells under three naturally-occurring physiological conditions. (a) In the discharged follicles, the granulosa cells exhibit degenerative changes, and the luteal cells show reduced reactions in the tests for steroids. (b) In the ovaries of old, off-lay hens, the granulosa cells resemble those of the laying hen; the luteal cells however, whilst still showing positive reactions for steroids, have undergone morphological changes, some of which suggest that the cells are atrophic. (c) Luteal are recognisable in embryonic ovaries as early as nine days of incubation. By fifteen days, these cells show strongly positive reactions in tests for steroids.