Morphological and enzyme ultracytochemical evidence is presented to support the contention that the walls of arachnoid cysts secrete fluid. Clinical evidence has already suggested this phenomenon, including intracranial pressure elevation and expansion in some cases, and the observation that arachnoid cysts constitute closed compartments with a fluid content that cannot be derived from other cerebrospinal fluid-containing spaces. Ultrastructurally, the cyst lining showed a similarity to subdural neurothelium and the neurothelial lining of arachnoid granulations in such morphological features as intercellular clefts with sinusoid dilatations, desmosomal intercellular junctions (upon which tonofilaments may be abutting), pinocytotic vesicles, multivesicular bodies, lysosomal structures, and the presence of a basal lamina. Some of these features, together with the presence of microvilli on the luminal surface, are consistent with fluid secretion. Moreover, enzyme cytochemistry demonstrated (Na+ + K+)-ATPase in the plasma membranes lining the cavity, either directly (the apical membranes), or via the intercellular clefts (the basolateral membranes), and, with alkaline phosphatase occupying the opposite plasma membranes, this structural organization indicates fluid transport toward the lumen. It may be surmised that arachnoid cysts derive from subdural neurothelium differentiating towards arachnoid villus mesothelium.