1. Avian tubercle bacilli were grown in hanging-drop cultures in embryo extract prepared as for tissue culture, but diluted to 25–5% of its usual concentration.

2. Microscopic branching colonies of pseudomycelia developed in the surface film of the hanging drops during the first few days of incubation, after which growth declined.

3. The development of these colonies was studied on the warm stage and proceeds as follows:

(a) The original rods elongate into filaments.

(b) The filaments multiply by ordinary fission and also by forming fine, pin-like terminal sprouts which grow into independent bacilli.

(c) After division the daughter filaments usually remain in contact at the site of fission; their terminal growth continues at an angle to the former cleavage plane and the colony thus acquires its characteristic branching structure.

(d) The colony enlarges and ramification becomes increasingly complex until about the fifth day of incubation when growth declines. The bacilli remain filamentous.

4. When transferred to embryo extract of normal concentration the pseudomycelial colonies revert to the ‘standard’ type of development characteristic of the more concentrated medium, i.e. they pass through a phase of filamentous proliferation followed by disintegration of the filaments into short discrete rods.

5. The development of a pseudo-mycelium is compared with the three common types of growth previously seen in more concentrated embryo extract.

6. The results of this investigation shed light on the controversial question of whether the ‘mycelial’ form of the tubercle bacillus is a single individual formed by ‘true’ lateral budding or a composite structure produced by the terminal, angular growth of coherent but independent bacilli. Our observations on the living organisms have shown that under appropriate experimental conditions both these forms may develop.