Marrow cells and thymocytes of unprimed donor mice were transplanted separately into X-irradiated syngeneic hosts, with or without sheep erythrocytes (SRBC). Antigen-dependent changes in number or function of potentially immunocompetent cells were assessed by retransplantation of thymus-derived cells with fresh bone marrow cells and SRBC; of marrow-derived cells with fresh thymocytes and SRBC; and of thymus-derived with marrow-derived cells and SRBC. Plaque-forming cells (PFC) of the direct (IgM) and indirect (IgG) classes were enumerated in spleens of secondary host mice at the time of peak responses. By using this two-step design, it was shown (a) that thymus, but not bone marrow, contained antigen-reactive cells (ARC) capable of initiating the immune response to SRBC (first step), and (b) that the same antigen complex that activated thymic ARC was required for the subsequent interaction between thymus-derived and marrow cells and/or for PFC production (second step). Thymic ARC separated from marrow cells but exposed to SRBC proliferated and generated specific inducer cells. These were the cells that interacted with marrow precursors of PFC to form the elementary units for plaque responses to SRBC, i.e. the class- and specificity-restricted antigen-sensitive units. It was estimated that each ARC generated 80-800 inducer cells in 4 days by way of a minimum of 6-10 cell divisions. On the basis of the available evidence, a simple model was outlined for cellular events in the immune response to SRBC.