Calcofluor White ST was used to monitor the morphological events in the biogenesis of cellulose in the microcyst wall of the wild-type strain (WS-320) and two developmental mutants (mic-1 and mic-2) of Polysphondylium pallidum. During encystment, the cell surface acquires a Calcofluor-specific material which appears to be cellulose because of its sensitivity to purified cellulase. Cellulose-containing vesicles appear distributed throughout the cytoplasm of encysting cells of the three strains. Later, the cellulose-rich vesicles appear near the cell surface. Subsequently, the cell surface stains with Calcofluor, and the vesicles are no longer detectable. Intracellular vesicles resembling the cellulose-rich vesicles in size, in the timing of appearance, and in cellular location are also seen in thin sections. These vesicles are surrounded by a single unit membrane, and their amorphous matrix, which contains a dense irregular core, further implicates them as the basis for the bilayered microcyst wall.