Subcutaneous adipose tissues from fetal and young rats were studied with enzyme histochemical techniques. Lipid staining and histological evaluation were also utilized to compare the development of a wide variety of enzyme activities to cytoplasmic lipid deposition and morphological differentiation of adipocytes. Three distinct stages of adipose-tissue differentiation were postulated. In stage III, adipocytes were morphologically differentiated (rounded, basal-lamina positive) and enzyme reactive for many enzymes. In stage II, however, adipocytes were reactive for some enzymes but were not morphologically differentiated. Stage I adipose tissue was histologically distinct from connective tissue but did not contain lipid-laden cells or enzyme-reactive cells. Stages I and II (95%) were predominant in fetuses, whereas stage III (90%) was predominant in young animals. Histochemical analysis of adipocytes in newborn rats established the metabolic competence of these cells despite their small size. These studies indicate that enzymatic differentiation of adipocytes clearly precedes morphological differentiation.