Phenolic glycolipid (PGL)-I, a Mycobacterium leprae-specific antigen currently used for serodiagnosis of preclinical leprosy, has thus far not been localized subcellularly in leprosy bacilli and their host cells. In this study, we developed an immunogold-labeling technique for qualitative identification of PGL-I sites in glutaraldehyde-osmium-fixed and Araldite-embedded M. leprae and host macrophages in human skin biopsies. Such "hard-fixed," plastic-embedded skin and nerve biopsies from patients with varying cell-mediated immunity to leprosy are amply available worldwide. Our method involves etching of plastic sections with H2O2, incubation with swine serum to eliminate nonspecific labeling, and long (22 hr) incubation at room temperature with monoclonal antibodies to PGL-I. Gold labeling was seen predominantly on cell walls of M. leprae, in vacuolar spaces of bacillated phagolysosomes, and occasionally on the cytoplasm and cell membrane of M. leprae. Host macrophage cytoplasm was labeled very infrequently. This technique allows studies on possibly persisting antigenic PGL-I in multibacillary leprosy patients during or after multidrug therapy. The method may also prove useful for subcellular localization of specific bacterial lipids in other mycobacterial diseases, including tuberculosis.