A mycoplasma-like agent, which resembled grey lung ‘virus’ of Andrewes and Glover in its sensitivity to chemotherapeutic substances in vivo, in its failure to grow in culture media, and in its failure to elicit immunity in infected animals, was derived from rats with naturally acquired chronic pneumonia. In mice it produced a chronic pneumonia from which mycoplasmas could not be cultured. When sections of diseased mouse lung were examined by electron microscopy, completely novel intracytoplasmic inclusions were observed in mononuclear cells lying free in the alveoli and bronchioles. The inclusions, which were less numerous in mice being treated with chemotherapeutic substances which inhibit the growth of mycoplasmas, appeared to represent successive stages in a developmental process. The fine structure of the inclusions is described and their possible nature is discussed.