The capacity for regeneration in minute fragments of the body of Lineus socialis appears to depend upon an initial stimulus emanating from the cut ends of the nerve cords. The dormant mesenchyme cells of the parenchyma are thereby activated and migrate to the anterior cut surface where they form an undifferentiated blastema. Aggregations of these multipotent regenerative cells then become differentiated as the primordia of the new organ systems. These new systems then induce such activities in the epidermal tissues as will complete the individualization of the blastema and later control the reorganization of all the tissues in the original fragment. Fragments without any portion of either nerve cord may survive for several weeks but do not become individualized. The limited regenerative capacities of related species seem to be dependent upon the extent of distribution of the activating agent in the nerve cord.