We report on the structure of N2-fixing nodules formed on the stem of Discolobium pulchellum Benth., an aquatic legume in the subfamily Pupilionoideae, tribe Aeschynomeneae, from the Hooded areas in the ‘Pantanal Matogrossense’ region of Brazil. The stern (and root) nodules were obligately aquatic, requiring permanent submergence in water or flooded soil, and receive oxygen via profuse aerenchyma covering The lower stem. Of the 69 isolates of rhizobia isolated from stem and root nodules, 70% were fast-growing acid producers and 38% were slow growers. The rhizobia were not photosynthetic. Nodules were connected to the stem, and the vascular system from the stem branched throughout the nodule, penetrating the infected, tissue within finger-like ingrowths of cortex. In both stem and root nodules, infected tissue was aeschynomenoid or desmodioid, that is, without uninfected (interstitial) cells. The infected cells in stem nodules were vacuolate, with visible infection threads. The inner cortex was rich in amyloplasts and contained the components of an oxygen diffusion barrier (a boundary cell layer without intercellular spaces and glycoprotein occlusions of intercellular spaces in other cell layers). The mid-cortex, external to the boundary layer, consisted of loosely-packed cells and these were continuous with stem aerenchyma. The outer part of the nodules was made up of phellogen-derived cells forming a periderm, or ‘corky’ layer of cells. The periderm formed large lenticels above cortical vascular bundles. These lenticels also connected with the stem aerenchyma. Root nodules differed only in that infected cells were not vacuolate, bacteroids were larger and contained more poly-β-hydroxybutyrate (PHB) and there was less aerenchyma/lenticellular tissue. Stem and root nodule structure is discussed in terms of adaptations to O2 constraints in an aquatic environment.