In vitro-maintained rabbit alveolar macrophages were infected with three strains of Nocardia asteroides. It was found that N. asteroides GUH-2 was resistant to macrophage killing, while N. asteroides 14759 was intermediate in resistance, and N. asteroides 10905 had little resistance to killing by macrophages. These observations correlated well with the data on relative virulence previously determined in mice. To establish the intracellular events leading to these differences, we determined the occurrence of phagosome-lysosome fusion in infected macrophages by both electron and fluorescent microscopic methods. It was found that the virulent strain GUH-2 inhibited phagosome-lysosome fusion; the intermediately virulent strain, 14759, partially inhibited fusion; and the less-virulent strain, 10905, was unable to inhibit fusion. In addition, electron microscopy of infected macrophages demonstrated that cells of the virulent strain, GUH-2, were not damaged, and only some of the cells of the intermediately virulent strain, 14759, were damaged, while most of the cells of the less virulent strain, 10905, exhibited considerable cellular destruction. These data indicated a direct correlation between the virulence of these organisms and their resistance to killing by alveolar macrophages, their lack of macrophage-induced ultrastructural damage, and their ability to inhibit phagosome-lysosome fusion. Thus, it appears that inhibition of phagosome-lysosome fusion in alveolar macrophages may be one of the mechanisms of pathogenicity of virulent strains of N. asteroides.