Lugol's solution is a practical and efficient fixative for the acetylene-reduction assay of nitrogenase activity in aquatic organisms. Correction must be made, however, for the solubility of ethylene in the liquid phase and reactions between Lugol's solution and ethylene. With a vapor phase – liquid phase volume ratio of 1.9:1, the mean solubility of ethylene in mixtures of lake water and Lugol's solution was 7.2%. No correlation was found between ethylene solubility and the concentration of Lugol's solution. Storage of fixed samples for more than 1 day before gas chromatographic analysis resulted in increased loss of ethylene from the vapor phase; the loss amounted to ca. 18% after 3 days. Higher losses were noted at higher concentrations of Lugol's solution. Most probably these effects were caused by iodine addition to ethylene, as indicated by the consumption of ethylene by iodine – potassium iodide solutions. The reaction was catalyzed by the rubber septa of the incubation vessels when the septa were in contact with the liquid phase. Loss of ethylene decreased with increased concentration of phytoplankton because the organisms absorbed iodine. By using a standardized technique and determining ethylene solubility and reaction patterns between ethylene and the mixture of water and Lugol's solution, it is possible to correct for the loss of ethylene.