Studies on the root nodules of Coriaria nepalensis Wall. using light and electron microscopy revealed that infected cortical cells are enlarged and form a compact kidney-shaped region with an acentric stele. Within a single cell, the actinomycetous endophyte has branched hyphae and elongate vesicles. Hyphae penetrate the host cell wall in different directions. Inside the host ceil, the hyphae are located in the peripheral region of the cytoplasm near the host cell whilst the vesicles are positioned towards the centre of the cell around the central vacuole. No septa formation was observed in the microsymbiont vesicles. Host cell mitochondria were aggregated near the hyphal/vesicular junction of the endophyte. In situ hybridization studies demonstrated that the nifH transcripts are unequally distributed over the infected cortical cells. In infected cells, nifH mRNA was located in the region occupied by the elongate vesicles of the endophyte near the host cell central vacuole. The results indicate that the elongate vesicles of the nodule endophyte of C. nepalensis are functionally identical to the spherical vesicles of the nodule endophyte of Alnus.