SUMMARYThe nitrogen-fixing blue-green alga, Anabaena azollae, occurs as a symbiont in leaf cavities of the water fern, Azolla. Organization and morphological aspects of tbe association, with empbasis upon the cavity area, were studied by light, transmission, and scanning electron microscopy. Cleared whole mounts, sectioned, and enzymatically digested materials were employed. Leaf cavity formation, including the association of the symbiont and epidermal hairs, is shown during leaf development in A. caroliniana Willd. Enzymatic digestion of the fern leaf tissue provided preparations of algal packets whicb correspond to the leaf cavity area. The digestion process complemented otber approaches in providing insigbt into the organization of the leaf cavity. Scanning electron microscopy allowed visualization of these packets in three dimensions. The packets are surrounded by a filmy, limiting envelope of unknown composition. The envelope was isolated and sbown to remain associated with hairs which protrude into the cavity area. The hairs are multicellular and may be branched or unbranched. When nitrogen fixation by the symbiont is the sole nitrogen source, sections through some cells of hairs in mature leaf cavities exhibit the ultrastructural characteristics of transfer cells. These characteristics are not observed, however, in sections through cells of hairs associated with the early stages of leaf cavity formation in tbe shoot tip. The potential significance of the envelope and hair cells in the metabolic interaction of the host and symbiont are discussed.