By making use of the known sequence of ovulation and fertilization in Holtzman rats, the Pontamine Blue reaction, and electron microscopy, the first stages in implantation were studied. Implantation is initiated when the blastocyst becomes clasped by the endometrium and hence assumes a fixed position (evening of day 5). At this stage, the trophoblast cells are in close association with the uterine epithelial cells, with interdigitating microvilli in places, but decidualization of the fibroblasts is just beginning. In the second stage of implantation the decidualized fibroblasts form a cup around the luminal epithelium. Evidence of adhesion of the cell membranes of trophoblast cells with the cell membranes of luminal epithelial cells can be seen at this time. The layer of fibroblasts immediately surrounding the luminal epithelium becomes epithelioid, resulting in a relative isolation of the luminal epithelium from its vascularization. This stage is well-developed by the afternoon of day 6. By the morning of day 7, the luminal epithelium has disappeared from the region of the forming ectoplacental cone down to the level of the abembryonic trophoblast. The trophoblast cells on the lateral aspect of the blastocyst are directly in contact with the residual basement membrane of the luminal epithelial cells, and are separated by this structure and a small connective tissue cleft from the stromal cells. The importance of the relative isolation of the epithelium by the stromal reaction and the adhesion of the cell membrane of the trophoblast cells to the cell membranes of epithelial cells with regard to removal and phagocytosis of epithelial elements are discussed, and many of the cytological features observed during the process are described.