As part of a comprehensive prospective clinicopathologic study by the Pediatric Oncology Group (POG), 2,092 children with acute lymphoblastic leukemia (ALL) were evaluated by uniform morphologic, cytochemical, and immunologic methods to assess the frequency and implications of granular lymphoblasts. All cases were Sudan black or myeloperoxidase negative and met French-American-British (FAB) morphologic criteria for ALL. Granular ALL, characterized by the presence of more than 5% marrow blasts with at least three clearly defined azurophilic cytoplasmic granules, was identified in 56 of the 1,252 fully studied cases (4.5%). The frequency of granular features did not differ among early pre-B (4.3%), pre-B (3.6%), and T (5.8%) ALL; no cases were identified among the 12 patients with B ALL. Within the early pre-B/pre-B group, granular ALL was equally distributed between good- and poor-risk clinical groups but was more frequent among FAB L2 than FAB L1 cases (12% vs. 2%; P less than or equal to 0.001). Patients were treated with standard POG protocols for early pre-B/pre-B and T ALL. Complete remission (CR) rates were significantly lower for those with granular lymphoblasts, regardless of risk group, immunophenotype, or FAB type. Analysis of event-free survival (EFS) showed a significantly poorer outcome for granular early pre-B/pre-B cases with FAB L2 morphologic characteristics (P less than 0.001) and for those classified as poor risk (P = 0.015). These findings suggest a relationship between granules and L2 morphologic characteristics in childhood ALL and indicate that the presence of granular lymphoblasts conveys a worse prognosis for certain subgroups of children with ALL.