Flow-induced changes in the red cell microstructure of human blood are identified from mechanical and optical evidence. On initiation of steady flow, a new microstructure develops as the shear strain increases through unit strain. This structure is identified with the formation of layers of red cells that slide on plasma layers (Thurston, 1989). At low shear rates, the cell layers are composed of aggregated cells, but at higher shear rates, the aggregates degrade to form thinner layers of oriented, compacted cells. The viscosity is determined by the hematocrit, the degree of compaction and viscosity within the cell layers, and the plasma viscosity. Degradation of cell aggregates is controlled by 1) the time required for the strain to increase by one unit (delta t1 = 1/shear rate) and 2) the dominant viscoelastic relaxation times of the red cell structures. Structures having relaxation times > delta t1 are degraded by cell disaggregation; when delta t1 is less than the shortest relaxation time of the layered cells, disaggregation and (cell and plasma) layer formation are nearly complete. Analyses of the non-Newtonian viscosity and cell layer characteristics are given for both normal and hardened cells.