Submandibular glands from 17-day-old rat fetuses were maintained in organ culture for five days in a medium consisting of Eagle's MEM (87%), horse serum (10%), and chick embryo extract (3%). Each day of the culture period explants were incubated for the demonstration of peroxidase activity and processed for light and electron microscopic observations. In some experiments cultures were exposed to 3H-thymidine one hour prior to fixation and incubation for the demonstration of peroxidase activity. Labelling index was determined using radioautographs of 1 μ Epon-embedded sections. At the time of explantation the submandibular gland rudiment consisted of undifferentiated epithelial cells arranged in cords. On day 3 of culture two additional cell types could be distinguished: terminal tubule cells and proacinar cells. The proacinar cells were characterized by peroxidase activity in their granules and cytoplasm. By day 4 acinar cells begin to appear. On the fifth day of culture the four cell types of the terminal tubule were present in the following proportions: undifferentiated cells, 44%; terminal tubule cells, 19%; proacinar cells, 31%; acinar cells, 6%. These results indicate that the cytodifferentiation of the secretory unit of rat submandibular gland in vitro is comparable to the differentiation in vivo.