A mycoparasite, Piptocephalis virginiana, shows resemblance to other fungal parasites of higher plants in the fine structure of hyphae and haustoria. The mode of penetration of the host cell, Choanephora cucurbitarum, probably involves mechanical forces. Although the presence of a cell wall degrading enzyme was not detected by conventional techniques, its role in penetration can not be ruled out. A collar around the haustorial neck is formed as an extension of the host cell wall. No papilla was detected although appressorium was seen during penetration. The young haustorium is enclosed in highly invaginating plasmalemma of the host cell and numerous cisternae of endoplasmic reticulum (ER). Appearance of an electron-dense sheath around the mature haustorium seems to coincide with the disappearance of cisternae of ER from the host cytoplasm in the vicinity of the haustorium. The role of host cytoplasm, particularly of ER, in the development of the sheath is discussed. Extensive accumulation of spherosome-like bodies, containing lipids, is found in haustorium, parasite, and host hypha.