The localization of acid phosphatase activity was differentiated from that of alkaline phosphatase in the foregut of the newborn lamb by light and electron microscopy. The examination of samples from fed and unfed lambs indicated the presence of alkaline phosphatase activity in endocytic vesicles originating from the brush-border. These vesicles, associated with protein absorption, were particularly numerous in fed lambs and occurred throughout the cytoplasm of the enterocytes. Acid phosphatase activity was absent from vesicles in the apical cytoplasm but it was localized in most sub-nuclear vesicles, also in the Golgi apparatus and the lysosomes of macrophages. The sub-nuclear vesicles were often observed in close proximity to the lateral and basement membranes of the enterocytes, also in continuity with the intercellular space. It is suggested that these results indicate the mechanism for transmission of brush-border and lysosomal enzymes, along with the immunoglobulins, into the lymph of the newborn lamb.