The stroma of mature brown fat has been shown to contain cells which can proliferate and accumulate fat in monolayer cultures, and which have inherent characteristics distinct from those of white fat precursor cells. The purpose of the present investigation was to characterize by electron microscopic analysis these brown fat cells and their subsequent development when they were grown in vitro. By comparison with the existing ultrastructural data on brown fat in situ, it could thus be determined whether or not the precursor cells have the capacity to differentiate in culture. The stromal-vascular fraction isolated from the brown fat of weaned rats was identified as containing adipocyte stem cells, preadipocytes, endothelial cells and a few mature adipocytes. During the first week in culture (i.e., growth phase to confluence), when multilocular fat accumulation occurred, the mitochondria of the preadipocytes developed cristae and matrix granules, as they do in differentiating brown fat in situ. Such granules have been shown to be a sign of intense inner membrane synthetic activity. After confluence, the mitochondria regressed in internal structure and became morphologically more similar to white fat mitochondria. It was concluded that mature brown fat contains precursor cells which can differentiate in vitro. However, this differentiation was incomplete, and the necessity of specific factors for a full mitochondrial development in brown fat is discussed.