The medulla of Peltigera discs can be separated by dissection from the overlying region which comprises the algal layer and upper cortex. In most cases, dissection has no marked effect upon the isolated tissue zones, so that a comparison of them gives a good approximate indication of the relative behaviour of the corresponding regions of the intact thallus. The behaviour of the medulla, entirely fungal in composition, gives some indication of the physiology of the lichen fungus. The algal region has a greater respiration rate and nitrogen content than the medulla, and it absorbs more glucose, asparagine, phosphate, and ammonia than the medulla. Compared to the medulla, the algal region absorbs more glucose than asparagine and this is attributed to a marked preference for glucose on the part of the algal cells. The medulla has a greater water content than the algal region, and may function as a water reservoir.