Excess vitamin A orally administered to pregnant mice during neurulation causes most of the embryos to become exencephalic. The study presents light and electron microscopic observations that trace the origin and course of the early cellular and tissue alterations associated with the malformation. The main effects of the teratogen are seen in the neuroepithelial cells of the cephalic region of the presumptive nervous system. The degree to which each embryo is malformed varies but no matter how extensive the abnormalities in each embryo, the neuroepithelium is always affected and the lesions are similar. Mesodermal abnormalities appear only in the most seriously affected embryos. With the electron microscope, changes are apparent in the neuroepithelial cells within a few hours after maternal treatment. These changes include the formation of abnormally shaped nuclei with swollen nuclear envelopes, dilation of the rough endoplasmic reticulum, and formation of cytoplasmic inclusions that contain DNA and/or RNA. The inclusions are thought to arise as an autophagocytic response of the cells to the sub-lethal injury induced by the teratogen. In addition, a number of cells are more severely affected and degenerate. Light microscopic examination of serial sections reveals that by 20 hours after treatment, the neuroepithelium becomes disorganized: the cells are round and misaligned and intercellular connections are lost. We postulate that the early cellular alterations lead to a disruption of the architecture of the early neuroepithelium so that the neural folds fail to meet and close. The tissue may survive the initial insult, but continues to grow in the everted manner characteristic of exencephaly.