A light and electron microscopic study was undertaken in an effort to establish the origin of the "epithelioid" cells in Dalén-Fuchs nodules from an eye enucleated because of sympathetic ophthalmia. The nodules were visible as minute (130-160 microns), round, grayish-white mounds elevating the retinal pigment epithelium. Bruch's membrane appeared intact in all the sections examined. By electron microscopy the "epithelioid" cells had round to oval nuclei with abundant, relatively lucent cytoplasm containing parallel profiles of rough-surfaced endoplasmic reticulum, prominent Golgi lamellae, clusters of polyribosomes, and scattered mitochondria. Many interdigitations of the plasma membranes, some of which exhibited fascia adherens type attachments, were observed. Some cells within the nodules showed large membrane-bound phagosomes containing laminated structures. Other "epithelioid" cells displayed moderately electron dense membrane-bound granules that appeared to be early precursors of lipofuscin granules. Examination of the nodules under ultraviolet light showed myriad autofluorescent yellowish-orange dots consistent with lipofuscin. Additionally, a montage of electron micrographs from the edge of the nodule, coupled with the above findings, provided support to the concept proposed by Ishikawa and Ikui (1972) that the "epithelioid" cells in Dalén-Fuchs nodules represent transformed retinal pigment epithelial cells forming a cage-like framework within the nodule. This study also emphasizes the remarkable capabilities for differentiation by the retinal pigment epithelial cells.