The principal cells in human acoustic tumors have been studied with the electron microscope. These cells are commonly related to nerve fibers and are enveloped in basal lamina material. These relations support the view that the principal cell is derived from the Schwann cell. Collagen in these tumors is intimately associated with the principal cells and their basal lamina, and it is concluded that, in spite of its Schwann cell origin, the principal cell is capable of producing the collagen common to these tumors.