Seventeen patients with cutaneous lupus erythematosus (LE) were observed to have bulla formation. Their clinical, histopathologic, and immunopathologic findings are reported. All biopsy specimens studied revealed moderate to severe vacuolating degeneration of the basal cell layer as well as lymphocytic inflammatory infiltrate involving the dermoepidermal junction. Immunoglobulins or C3 (or both) was deposited in the basement membrane zone in eight of nine patients in whom direct immunofluorescence study was performed. We believe that the immune reaction in the papillary dermis and the severe vacuolating degeneration in the basal cell layer result in the separation of epidermis and dermis, and thus bullous formation, in some patients with LE. This phenomenon can be observed not only in systemic LE but also in subacute cutaneous LE and discoid LE.