Protoplast regeneration from extruded cytoplasm of the multicellular marine green alga Microdictyon umbilicatum (Velley) Zanardini (Cladophorales, Anadyomenaceae) was investigated. The early process of protoplast formation is comprised of two steps: agglutination of cell organelles into protoplasmic masses followed by generation of a temporary enclosing envelope around them. Agglutination of cell organelles was mediated by a lectin–carbohydrate complementary system. Three sugars, D‐galactosamine, D‐glucosamine, and α‐D‐mannose, inhibited the agglutination process, and three complementary lectins for the above sugars, peanut agglutinin, Ricinus communis agglutinin, and concanavalin A, bound to the surfaces of chloroplasts. Agglutination assay using human erythrocytes showed the presence of lectins specific for the above sugars in the algal vacuolar sap. A fluorescent probe 1‐(4‐trimethylammoniumphenyl)‐6‐phenyl‐a, 3,5‐hexatriene revealed that the envelope initially surrounding protoplasts was not a lipid‐based cell membrane. However, this developed several hours later. Simultaneous fluorescein diacetate and propidium iodide staining showed that the primary envelope had some characteristics of cell membranes, such as semipermeability and selective transport of materials. Also, fluorescein diacetate staining showed esterase activity in the protoplast and relocation of cell organelles and compartmentalization of cytoplasm during the process of regeneration. Both pH 7–9 and salinity 400–500 mM were found to be essentially important for the development of the protoplast envelope. When the basic regeneration process was accomplished, two alternative pathways of development were seen; about 70% of one‐celled protoplasts transformed into reproductive cells within 2 weeks after wounding, whereas others began cell division and grew into typical Microdictyon thalli. Quadriflagellate swarmers were liberated from the reproductive cells, and they germinated into mature individuals. It is therefore suggested that this species may use the wound response as a method of propagation and dispersal.