1. Axial Rotation is postulated as the origin of the vertebrates, as this theory alone can account for the reversal from ventral to dorsal of the position of the nervous system. 2. The uncrossed visual control in the higher invertebrates is contrasted with the contralateral control in the vertebrates. 3. The optic chiasma of flat-fish undergoes certain changes during their axial rotation from upright to flat, and these are considered relevant to the theory. 4. The rise and fall of the pineal complex in vertebrate phylogeny is explained by this theory. 5. The enantiology of epithalamus and hypothalamus is related to that of the dorsal (degenerate) and ventral (functioning) halves of the rhinencephalon. 6. The glandular functions of the pineal complex are compared with those of the pituitary. 7. The dorsal pituitary of insects is compared with the ventral pituitary of vertebrates, especially in regard to the power of internalizing an environmental rhythm.