Studies with the light microscope (Am. J. Path., 34: 631, '58) indicated that an injection of endotoxin into the carotid artery of a rabbit alters the blood-brain barrier allowing the distribution of subsequently injected colloidal iron throughout the cerebral cortex. The present investigation by electron microscopy determined the distribution of the colloidal iron oxide in the normal and endotoxin altered cerebral capillaries of rabbits. Four hours prior to the intracarotid injection of saccharated iron oxide the animal received an injection via the same artery of either 50 μg gram-negative endotoxin or a control dose of normal saline. The animals were sacrificed at times from 15 minutes to two hours after the injection of iron oxide and samples of the cerebral cortex were processed for electron microscopy by routine methods. In those animals that did not receive endotoxin, the colloidal iron was limited to the lumen of the cerebral capillaries and occasional large endothelial vacuoles. None of the iron was found in the endothelial pinocytotic vesicles. In the endotoxin animals the iron oxide particles were found in quantity in the capillary endothelium phagosomes, the basement membrane, and in astrocytes and their processes. The fine structure of the cerebral capillary is reviewed and evidence is presented in support of the hypothesis that the barrier mechanism for colloidal tracers lies in a unique property of the brain's endothelial pinocytotic vesicles.