The distribution and ultrastructural localization of CEA in signet-ring cells of 15 gastric cancer specimens were observed by PAP and immunoelectron microscopic methods. The mechanism of abnormal distribution of CEA in the signet-ring cell and its biological significance are discussed. The results showed that the CEA positive rate in signet-ring cells was 100% with the polarity lost in distribution. Under the light microscope, the CEA stain patterns were of two types-cytoplasmic and membranous types. The former was predominant. Under the electron microscope, most of the CEA was distributed on the cell membrane and cytoplasm. CEA was found in intracellular membranous structure of the cancer cells, especially in protein synthesis and transport organellae (RER, Golgi Complex etc). The synthesis of CEA in cancer cells increased, yet its elimination was somewhat hampered. The result was that the RER became extended and were full of CEA (+) material. In the free signet-ring cell, there was a small and short contact plane. The tight junction was severed as the cell junction was reduced. The antigenic determinant of CEA was glycoprotein. The abnormal distribution of CEA in signet-ring cells might be the morphologic reflection of the glycosylation of surface glycoprotein of tumor cells. These abnormal changes would lead to mal-functions and biologic misbehavior in the cells. It may even lead to disturbances in connection and recognition, loss of contact inhibition and decrease in the adhesion between tumor cells and therefore may easily give rise to infiltration and metastasis.