Transmission electron microscopic examination of thin-sectioned Strigula elegans foliicolous on Magnolia grandiflora reveals localized cytoplasmic, as wel1 as intraplastidic, accumulations of haematochrome within the phycobiont, Cephaleuros virescens (Chroolepidaceae, Chlorophyta). Numerous plasmodesmata similar in appearance to those occurring in nonlichenized C. virescens occur in the phycobiont cross wal1s. The ascomycetous mycobiont contains Woronin-like bodies in the septal pores of some hyphae and concentric bodies in hyphae in some regions of the thallus. The alga-fungus structural relationship is either close apposition without wal1 thinning or dissolution, or fungal penetration of the phycobiont by one or more walled haustoria. Haustorial penetration is not restricted to senescing or decaying cells, as is the case in other pyrenocarpous lichens. Neither inter-cellular nor intracellular crystalline material was observed in glutaraldehyde-osmium fixed specimens. Within host tissue subtending the lichen thallus, a wounding response occurs and is analogous to that induced by nonlichenized C. virescens.