The adrenal cortex from 31 fetal lambs ranging from 60 to 146 days of gestation was examined by light and electron microscopy. The adrenals of two newborn lambs and three adult ewes were also examined. The adrenal cortex of the adult gland is divided into three regions. The cortex of the fetal lamb consists of two regions only for no zona reticularis is ever clearly seen. The adrenal cortex grows steadily throughout gestation until a rapid phase of growth in the final few days. Most of this terminal growth takes place in the zona fasciculata; it coincides with the known sharp rise in fetal plasma corticosteroids. The cells of the zona glomerulosa appeared capable of secreting steroids in the earliest fetus examined. The cells changed little throughout gestation but from 116 days to term there was an obvious alteration in the proportion of tubular to lamellar cristae within the mitochondria. Cells within the zona fasciculata appeared to undergo functional differentiation as gestation progressed. At 60 days only a few cells appeared capable of secreting steroids. These were situated at the cortico-medullary border and contained mitochondria with mainly vesicular but some tubulolamellar cristae, smooth endoplasmic reticulum and large Golgi apparatus. The remainder of the cells within the region contained mitochondria with tubulolamellar cristae and smaller amounts of predominantly rough endoplasmic reticulum. As gestation progressed the number of differentiated cells increased slowly and in a radial direction towards the zona glomerulosa. As the cells differentiated the amount of endoplasmic reticulum increased and changed from mainly rough to predominantly smooth profiles. The mitochondrial cristae became mainly vesicular. These changes appear to relate to an increase in steroidogenic capacity of the cells. There is a rapid development of functionally differentiated zona fasciculata cells in the last few days of gestation.