Rats were subjected to ovariectomy or a control operation on day 10 of pregnancy and light and electron microscope studies carried out to examine the cells of the decidua basalis and the mesometrial triangle. Degeneration of the decidua basalis was rapid but proliferation in the mesometrial triangle and differentiation of the typical granulated cells continued for some time, and resulted in the formation of a metrial gland. The earliest effect noted in the metrial gland was the appearance of inclusions in the fibroblast-like stromal cells one day after ovariectomy. During the next four days many stromal cells became packed with a variety of inclusions and it is suggested that some of these may represent phagocytosed cellular debris. Some debris appeared to be in intercellular spaces and was probably derived from granulated cells. Some granulated cells appeared to develop apparently empty vacuoles and this may be a preliminary stage in degeneration. Although granulated cells decreased to become very few in number five days after ovariectomy, the precise mechanism of their loss and the relationship of this to the hormonal environment could not be established.