Septate junctions develop initially just basad from apical junctional complexes at the apical ends of regenerating gastrodermal cells. The first morphological indication of differentiation of the junction is the appearance of gentle undulations of the plasma membranes of apposing cells. Subsequently dense dots develop at fairly regular intervals at the cytoplasmic surface of one cell, while SER cisternae become localized opposite them near the surface of the apposing cell. The dense dots are associated with bulges which narrow the intercellular space. Later the dense dots are replaced by filaments aligned along the inner leaflet of the parent cell. Strands of amorphous deposits form connections between SER cisternae and the sister membrane on the opposite side of the junction. Ruthenium red staining provides information on precursors which occupy the intercellular space between the apposed plasma membranes. As development of the junction progresses, ruthenium red stains only the newly formed septa but not the interseptal matrix. Regular arrangement of individual septa seems to be completed under the control of V-projections from both of their surfaces. Precursors for the structural material of the septa may be a secretory product derived from the SER. Dense dots and their derived filaments probably serve as reinforcing material for strengthening the cell membrane of the junction.