The ultrastructural localization of H2O2 production in suspended polymorphonuclear leukocytes (PMN) stimulated with particles was studied using CeCl3 technique. PMN stimulated with opsonized zymosan or polystylene latex with or without IgG were incubated in 0.1 M Tris- maleate buffer with 1 mM CeCl3 and 10 mM aminotriazole. Cells were then fixed and embedded in a resin for electron microscopy. The reaction product of cerium perhydroxide was observed on the phagosomal membranes and on the areas of the plasma membrane engulfing the particles. Catalase or ferricytochrome-c decreased the deposits. p-Benzoquinone (O2- scavenger) inhibited the formation of the deposits, but KCN or NaN3 enhanced it. Pretreatment with p-diazobenzenesulfonic acid inhibited the reaction. In some PMN pretreated with cytochalasin-B, cellular aggregation was observed. The H2O2 production in these cells were observed on the membrane adherent to the particles and on the contact surface of the membrane of adjoining PMN. The plasma membrane was damaged and the electron-dense product was diffused into the cytoplasm. These results clearly show that H2O2 production is initiated at the area of the plasma membrane adherent to the particles and that H2O2 is released before the completion of phagocytosis.