The process of erythropoiesis and vasculogenesis in the yolk sac of the bat (Tadarida brasiliensis cynocephala) has been studied through the use of both light and electron microscopy. Stem cells arise from the leading edge of the migrating splanchnic mesoderm and transform into primitive erythroblasts. Differentiation involves either contact or association with the endodermal cells, since all erythropoietic activity occurs on the endodermal side of the expanding vascular bed, and many of the cells are in close apposition to the lateral or basal plasma membranes of the endodermal cells. Endodermal cells also phagocytize developing primitive erythroblasts during the later stage of the process when erythropoiesis is subsiding in the yolk sac. Cells destined to become the endothelium of the expanding vascular bed also arise from the leading edge of the migrating splanchnic mesoderm. Their process of differentiation involves the development of cytoplasmic extensions that may surround a group of differentiating erythroblasts, enclosing them in the newly formed lumen of the blood vessel. The cytoplasmic extensions make contact and develop junctional complexes with similar processes from other cells to complete the lumen of the lengthening vascular bed. Cells of the granulocyte series or megakaryocytes are not observed in the yolk sac of the bat as has been described in certain other species.