Cryptococcus neoformans grown in the parasitic state was observed by the freeze-etching technique and was compared with that grown on culture media. Unlike other yeasts, this organism grown in vivo is very often devoid of the "ordinary" invaginations. The membrane of the cell grown in vivo was almost free from concavity and convexity except for many round depressions which represent the surface view of paramural bodies. Some of the paramural bodies were found to be multivesicular systems. Most were spherical invaginations containing a single vesicle or its ghost remaining after secretion of the vesicles. In clear contrast to the cell grown in vitro, the in vivo cell contained a great number of vesicles in the cytoplasm. These seemed to show high-secretion activity in C. neoformans grown in the parasitic state. On transfer from in vitro to in vivo, this organism enlarged the cell wall, capsule, and cell body. The appearance of a large vacuole, accumulation of storage organelles, and the existence of rodlike structures, seemingly lipid deposits, were also noted in the cytoplasm of the cell grown in vivo. the meaning of these results as well as the mode of capsular production are discussed.