Electron microscopy reveals that the multicellular hairs, in the Anabaena-containing leaf cavities of Azolla, produce labyrinthine wall ingrowths, and have dense cytoplasm with numerous mitochondria and abundant endoplasmic reticulum. Development of transfer cell morphology, in this location, might be an adaptation facilitating interchange of metabolites between Azolla and its algal partner. Equally prominent wall ingrowths are also found in the absence of Anabaena. It is suggested that they may be either a constitutive feature of Azolla or may be induced as a response to the presence of combined nitrogen sources in the axenic culture medium. The occurrence of plasmalemmasomes, in the developing hair-cells of Azolla, is compared with their presence in lichens, mycorrhiza and at host-parasite interfaces.