An electron microscopical study has been made of the rectal complex. The perinephric membrane is a complicated structure which, in the posterior region, comprises an inner and an outer sheath separated by a space containing tracheolar end cells. The outer sheath is formed of a single layer of cells covered by an external basement membrane. The inner sheath is a multi-laminate structure made up of many thin, cellular layers which in places are reduced to closely apposed plasma membranes. Anteriorly the cellular layers are reduced in number, but each layer is of greater thickness; they finally terminate where the perinephric membrane is applied to the intestine. Posteriorly the inner sheath makes contact with the rectal epithelium. An earlier description identified three spaces within the rectal complex: the perirectal, subepithelial and peritubular spaces. The first two are true intercellular spaces, bounded by basement membranes, but the so-called peritubular space is occupied by necrotic cells. The inner sheath of the perinephric membrane is interrupted by the leptophragmata. Each leptophragma is bounded by a prominent electron-dense ring into which the laminae of the inner sheath are inserted. The outer sheath forms a blister over the leptophragma and is completely noncellular in this region. At the base of the blister a basement membrane covers the leptophragma itself, and the body of the leptophragma cell projects into the lumen of the tubule, with a thin layer of cytoplasm lying beneath the basement membrane. Both this layer and the cell body itself bear microvilli. The cell has a normal complement of mitochondria, but these do not invade the microvilli. In this last respect the ordinary tubule cells differ from the leptophragma cells in that most of their microvilli contain mitochondria, with connexions between the outer mitochondrial membrane and the plasma membrane. The tubule cells have a poorly developed endoplasmic reticulum but are filled with numerous small granules; basal infoldings are restricted to those parts of the cell which face the perirectal space. The permeability of the perinephric membrane has been re-investigated and it is shown that the membrane is more permeable to water and solutes at the anterior end, as might be expected if the inner sheath were the main barrier. Using preparations isolated in small volumes of haemolymph or other external media it has been shown that the rectal complex takes up potassium against a gradient of concentration. The lumen of the perirectal tubule is some 50 mV positive with respect to the external medium, so the uptake of potassium must be active. The leptophragma is freely permeable to chloride and this ion appears to enter the tubule passively. A model of the mechanism of the rectal complex is proposed, whose main feature is that the high osmolarity of the fluids within the rectal complex is brought about by the inward secretion of potassium chloride, unaccompanied by water, at the leptophragmata. This should result in a fall in the osmolarity of the external medium. A substantial fall has been observed on occasion, but in most experiments a fall is barely detectable. It is believed that the impermeability of the leptophragmata to water is rapidly lost in a deteriorating preparation.