Twenty-six verruga peruana nodules were studied. The presence of Factor VIII-related antigen and Ulex europaeus lectin binding, and the ultrastructural finding of rudimentary cell junctions and pinocytotic vesicles establish the endothelial character of the proliferating cells in the verruga nodules. Whereas superficial lesions could show an angiomatoid pattern, deep-situated nodules tended to present a compact type of growth. Electron-microscopic studies have shown that Bartonella bacilliformis was found abundantly in the extracellular spaces in the florid lesions and that no organisms were present in the late, resolving subcutaneous nodules. Although no true intracellular 'viable' microorganisms were noted, pseudopods of cytoplasm entrapping one or two bacteria and surrounding matrix substance were seen often. The characteristics of cytoplasmic inclusions previously described in verruga cells as 'chlamydozoa' were detailed. The ultrastructure of the inclusions corresponded to endothelial phagocytic cells in which complex invaginations of the cell surface had produced a labrynth of interconnected channels and vacuoles containing degraded bacteria, extracellular matrix components, or both. We conclude that in light microscopy the finding of Rocha-Lima's inclusions is the only definite morphologic evidence of the presence of bartonella in verruga lesions.