Operation specimens of articular tissue from about 8000 patients with clinically evident rheumatoid arthritis have been studied by light microscopy and in 583 cases by electron microscopy over a period of several years. We examined the tissue in closest contact with eroded cartilage. In approximately 70 per cent. of cases this was a fibrous pannus of compact collagenous connective tissue with few fibrocytes; in approximately 25 per cent. of cases a pannus, consisting of loose granulation tissue, moderately rich in collagen fibres, fibroblasts, and small blood vessels; in approximately 5 per cent. of cases, however, we found, that the zone in close contact consisted of uniform layers of immature-looking synovial cells with large nuclei. These immature-looking cells encroach on the cartilage from the junction of synovium with the articular cartilage. The development of these aggressive cell structures seemed to be preceded by a fibrinous inflammatory exudate. The cells contain lysosomal enzymes which are able to destroy prcteoglycans and collagen fibres and could therefore be the basis of erosion of cartilage. The cell structures seem to be short-lived and they are avascular at least initially. Most of the cells seem to die within a few days. The remaining cells assume the appearance of fibroblasts and form the later pannus. The cell content decreases as the pannus gets older. It is suggested that the destruction of articular cartilage takes place only during the short time in which these aggressive cell structures are present. The erosive synovial cells may however reappear during the intermittent course of the disease, after episodes of quiescence and acute inflammation.