Morphology of guinea-pig thymic fragments was studied sequentially during in vitro organ culture by using light and electron microscopy and 3H-thymidine autoradiography. In culture the fragments became alymphoid. Thymic lymphocytes started to disappear first at the corticomedullary border, which gradually broadened, giving rise to alymphoid epithelial fragments. As the lymphoid cells disappeared the thymic epithelium began to transform into a keratinized squamous epithelium. The keratinization started in the cells surrounding the Hassall's corpuscles, causing the enlargement of the corpuscles and finally total keratinization of the cultured epithelial fragments. In autoradiographic studies cell proliferation could be observed in uncultured thymuses at the cortical pericapsular area. In cultured alymphoid fragments labelled cells were distributed diffusely in the epithelium. Later labelling was concentrated to epithelial cells transforming to keratinized epithelium. Ultrastructural studies similarly showed transformation of the epithelial cells to squamous keratinized epithelium. The observation support the view that Hassall's corpuscles are derived from the keratinized thymic epithelium and that their existence is connected to the normal function of the epithelium.