Five isolates of Cryptococcus neoformans type A with stable capsular thicknesses were used. Three of the isolates had capsules of medium size, one had a minimal capsule, and the other, a large capsule. Peritoneal exudate cells from Lewis rats were cultured on cover slips in Leighton tubes containing medium 199 and 20% fresh, isologous normal rat serum. Yeast cells were added to the Leighton tube cultures, and, 2 hr later, the extracellular yeasts were rinsed out. Cover slips were removed from some tubes for Wright staining and measurement of both phagocytosis and loss of macrophages. The remaining tubes were reincubated and sampled at 24 or 48 hr. To determine fate of yeast cells after ingestion, washed cover slips were inverted onto agar slide cultures, and specific macrophages were observed in situ for subsequent multiplication of their intracellular yeasts. More than half of the macrophages survived 24 to 48 hr of exposure to different strains of C. neoformans, with small, medium, or large capsules. Phagocytic activity was dependent upon a heat-labile factor in normal rat serum. The number of yeast ingested by macrophages was inversely proportional to the capsular size. Although most of the ingested yeasts were resistant to intracellular killing, the agar culture technique clearly demonstrated that many were unable to multiply, presumably dead. Three of the isolates were more susceptible than the other two, and the fate of these yeasts after engulfment was not correlated with their capsular size.