An ultrastructural analysis of oral balloon cell nevus of intramucosal type complemented with an immunohistochemical study was performed for the first time. The lesion was composed of large balloon cells with an admixture of small nevus cells and melanophages at the periphery. Balloon cells showed cytoplasmic accumulation of vacuoles of varying sizes and the presence of microgranular and vacuolated melanosomes were found. Residual cytoplasm contained no identifiable organelles. A spectrum of transitional forms between balloon cells and conventional nevus cells with microvacuoles was readily observed. Both cells exhibited intense immunoreactivity to multiple melanocytic markers. Ballooning phenomenon was not evident in melanophages containing a large amount of melanosome complex. It can be inferred, from the present and previous observations, that progressive vacuolization of melanosomes in nevomelanocytes may be responsible for the formation of peculiar ballooning appearance, suggesting an aberrant melanogenesis.