Embryos of the poeciliid Heterandria formosa develop to term in the ovarian follicle in which they establish a placental association with the follicle wall (follicular placenta) and undergo a 3,900% increase in embryonic dry weight. This study does not confirm the belief that the embryonic component of the follicular placenta is formed only by the surfaces of the pericardial and yolk sacs; early in development the entire embryonic surface functions in absorption. The pericardial sac expands to form a hood-like structure that covers the head of the embryo and together with the yolk sac is extensively vascularized by a portal plexus derived from the vitelline circulation. The hood-like pericardial sac is considered to be a pericardial amnion-serosa. Scanning and transmission electron microscopy reveal that during the early and middle phases of development (Tavolga's stages 10–18 for Xiphophorus maculatus) the entire embryo is covered by a bilaminar epithelium whose apical surface is characterized by numerous, elongate microvilli and coated pits and vesicles. Electron-lucent vesicles in the apical cytoplasm appear to be endosomes while a heterogeneous group of dense-staining vesicles display many features characteristic of lysosomes. As in the larvae of other teleosts, cells resembling chloride cells are also present in the surface epithelium. Endothelial cells of the portal plexus lie directly beneath the surface epithelium of the pericardial and yolk sacs and possess numerous transcytotic vesicles. The microvillous surface epithelium becomes restricted to the pericardial and yolk sacs late in development when elsewhere on the embryo the non-absorptive epidermis differentiates. We postulate that before the definitive epidermis differentiates, the entire embryonic surface constitutes the embryonic component of the follicular placenta. The absorptive surface epithelium appears to be the principle embryonic adaptation for maternal-embryonic nutrient uptake in H. formosa, suggesting that a change in the normal differentiation of the surface epithelium was of primary importance to the acquisition of matrotrophy in this species. In other species of viviparous poeciliid fishes in which there is little or no transfer of maternal nutrients, the embryonic surface epithelium is of the non-absorptive type.