Histochemical and ultrastructural aspects of adipocyte differentiation in subcutaneous tissue of fetal pigs were analyzed in a longitudinal study. A matrix of collagen fibers surrounding adipocytes developed after the establishment of a distinct and continuous PAS-positive basement membrane. The degree of plasma membrane invagination and specialization was positively correlated with the extent of basement membrane and collagen matrix formation. Close spatial relationships between narrow, smooth endoplasmic reticulum, plasma membrane invaginations, the surface of lipid droplets and mitochondria were observed in differentiating adipocytes. Histochemical and ultrastructural criteria for the identification of preadipocytes are: (1) perivascular location; (2) mitochondria localized in the Golgi zone; (3) cytosolic glycogen; (4) rough endoplasmic reticulum with cisternae uniformly and approximately 600 Å wide; (5) free ribosomes and few polysomes, and (6) lipid droplets encased by microfilaments. These criteria permitted clear distinction from obvious fibroblasts and macrophages. Other stromal cells were morphologically abnormal. Occasionally, adipocytes and perivascular cells exhibited close intercellular contacts that were morphologically distinct from intercellular contacts between contiguous endothelial cells.