1. Extent of distribution has a direct influence on the speciation of the group concerned in this way, that as the range of a group of animals is extended, the species increase out of proportion to the genera, the genera out of proportion to the families, and the families out of proportion to the orders. 2. Comparison of different families having unequal geographic ranges is usually inaccurate due to the great differences in the other factors controlling their speciation. Those families which do lend themselves to such a comparison show decidedly the effect of extent of distribution, e. g., the bats and some of the insectivores, the families of widest distribution having the largest indices of modification. A number of exceptions exist in the form of certain wide ranging genera which have a paucity of species. We have no adequate explanation for this phenomenon. 3. Comparison of the faunas of areas of different size gives very accurate results. A number of tabulations show as a whole an invariable increase in the index of modification as the distributional area is extended by the addition of either life zones, faunas, or associations. Such tabular comparisons were made for all the classes of terrestrial vertebrates, for several families of insects, and for the marine Amphipoda of the suborder Gammaridea. Allowing for explicable exceptions, the increase in number of lower systematic groups out of proportion to the increase of higher systematic groups as the area considered is enlarged is a remarkably constant and wide-spread phenomenon. 4. The theoretical explanation here proposed for this phenomenon involves a number of complex problems relating to evolution and speciation, including isolation, the time element, and causes of specific and generic modification. 5. Isolation is an important factor in speciation, since the separation of species into two or more parts allows the parts to become different. The degree of divergence of the segregated parts is largely dependent upon the duration of segregation. 6. Time, in conjunction with isolation and evolution, tends to increase the number of genera and species in a family, but the index of modification, i. e., the average number of species per genus, remains approximately the same in a given area. 7. Three types of modifications in animals may be named :-first, "extrinsic" modifications, which are induced by climate and other environmental conditions, and which lead to differentiation of species and subspecies primarily; second, "intrinsic" modifications, which are concomitant with a change in habits or mode of life of the animal, due to the occupation of a new ecologic niche, and which usually lead to generic or family differentiation; and third, neutral modifications, which are merely the result of the natural tendency of all animals to vary and to be subject to more or less orthogenetic evolution, modifications which can not be correlated with environmental conditions, nor with a change in mode of life of the animal, but which may be influenced largely by inherited tendencies. Such modifications are responsible for the production, through isolation, of different species to live under the same climatic and environmental conditions, and of different genera to occupy the same ecologic niche. 8. Specific modifications may be of three kinds: (1) extrinsic modifications, (2) neutral variations in segregated regions, (3) incipient generic modifications. Generic modifications may be (1) intrinsic modifications, or (2) neutral varations, given generic value by a longer period of segregation. 9. Since different types of a group of animals are usually found associated with different environmental conditions or different ecologic niches, and since it is common for animals, if unhindered, not only to extend their range continually into new territory, but also to occupy new ecologic niches, and since these tendencies lead to specific and generic differentiations, respectively, any given area will have a differentiation of species proportionate to its variety of environmental conditions, and of genera proportionate to its variety of suitable ecologic niches. 10. Since, as the area of distribution is extended, the chance of new conditions of climate and environment being represented remains approximately the same, the increase in number of species is nearly proportional to the increase in the area of distribution, but since the chance of new ecologic niches being represented in most cases constantly decreases, the increase in genera proceeds at an everdiminishing rate. This, going hand in hand with the nearly constant increase in species or subspecies, results in a constantly increasing index of modification.