Mucosal biopsies from four women with collagenous colitis and ten controls were studied. By light microscopy the cells of the pericryptal fibroblast sheath appeared diminished in number but increased in size in collagenous colitis. Electron optically in the controls the pericryptal fibroblasts were in intimate contact with the epithelial basal lamina in the crypts. On the free surface the fibroblasts maintained contact with the epithelial cells by attenuated cell processes. In collagenous colitis, in the middle and upper thirds of the crypts the fibroblasts sheath was separated from the epithelium and the fibroblasts assumed the characteristics of myofibroblasts. The separation was accentuated towards the mouths of the crypts. Beneath the surface epithelium the attenuated fibroblast cell processes seen in normal colon were grossly deficient. The basal lamina was also deficient focally and the surface epithelial cells were resting directly on a thickened collagen table. In collagenous colitis the excess collagen appeared to be secreted by the activated myofibroblasts of the pericryptal sheath.