The anatomical structure of internal sacs for embryonic incubation was studied using SEM and light microscopy in three cheilostome bryozoans—Nematoflustra flagellata (Waters,1904), Gontarella sp., and Biflustra perfragilis MacGillivray, 1881. In all these species the brood sac is located in the distal half of the maternal (egg-producing) autozooid, being a conspicuous invagination of the body wall. It consists of the main chamber and a passage (neck) to the outside that opens independently of the introvert. There are several groups of muscles attached to the thin walls of the brood sac and possibly expanding it during oviposition and larval release. Polypide recycling begins after oviposition in Gontarella sp., and the new polypide bud is formed by the beginning of incubation. Similarly, polypides in brooding zooids degenerate in N. flagellata and, sometimes, in B. perfragilis. In the evolution of brood chambers in the Cheilostomata, such internal sacs for embryonic incubation are considered a final step, being the result of immersion of the brooding cavity into the maternal zooid and reduction of the protecting fold (ooecium). Possible reasons for this transformation are discussed, and the hypothesis of Santagata and Banta (Santagata and Banta1996) that internal brooding evolved prior to incubation in ovicells is rejected. J. Morphol. © 2006 Wiley-Liss, Inc.