The synovium from a case of pigmented villonodular synovitis was examined by light and electron microscopy. The hyperplastic villous processes were found to contain, besides many blood vessels, a dense population of phagocytic cells actively engulfing and digesting the erythrocytes; some of their phagosomes ("siderosome") contained iron-laden micelles sometimes arranged in a crystalline lattice. The synovial vessels were remarkable in two respects: first, there was evidence of endothelial breakdown; second, the basement membranes were strikingly multilayered.