Using optic lobe and telencephalon of the domestic fowl, ranging in age from 2 days of incubation to the adult, the fine structure of the nerve cells and the morphologic changes associated with their differentiation were observed with the electron microscope. Data of 3H-thymidine autoradiography were used for orientation as to the distribution of the matrix cells and neuroblasts in the wall of the neural tube. 1. The matrix layer, which earlier has been called primitive ependymal layer, is composed of solely one kind of cell, named the matrix cell. 2. The characteristics in the fine structure of the matrix cell are abundant free ribosomes and a poorly developed intracellular membrane system. The matrix cell contains a small Golgi complex, but little rough-surfaced endoplasmic reticulum. In the cytoplasm several mitochondria are scattered and the ribosomes form small aggregates throughout the cytoplasm. 3. From the earliest stage of differentiation, the neuroblasts differ from the matrix cells as to the development of a rough-surfaced and a smooth endoplasmic reticulum. 4. As the neuroblast matures, the endoplasmic reticulum, intracellular vacuoles, and mitochondria gradually develop, and the rough-surfaced endoplasmic reticulum seems eventually to become the structure called Nissl substance.