Renal changes were studied in rats with short and long-term alloxan diabetes. In the first few days, there was necrosis of cells lining the distal portion of the proximal convoluted tubules, with focal involvement of distal convoluted tubules, and was especially marked at the cortico-medullary junction. Not all tubules were equally affected. Disruption of the tubular basement membrane led to the formation of interstitial granulomas. Regenerating tubular epithelial cells were frequently abnormal, with basophilic cytoplasm and lacking a brush border. Regenerating cells were often flat or cuboidal, and sometimes they formed prominent clusters projecting into the dilated tubular lumen. Cystic tubular dilatation ensued in about 70 per cent of the cases and was very prominent in most of them, leading to a spongy appearance of the cortex. Tubular dilatation was probably due both to abnormal tubular cells and to incomplete tubular obstruction. These changes are different from chronic interstitial nephritis with which they were probably confused in the past. This lesion can be attributed to alloxan directly, with diabetes probably playing a secondary role by interfering with normal tubular regeneration.