Fluorescence microscopy and electron microscopy were used to study the binding and uptake of transferrin by developing erythroid cells from the fetal rat liver. Following incubation of the cells with fluorescently conjugated transferrin for 20 min at 37°C, transferrin was visualized by fluorescence microscopy to be concentrated in discrete patches. In addition, early normoblasts showed a large amount of labeling in a single area of the cell in a manner resembling cap formation. During enucleation most of the bound transferrin was distributed in the cytoplasm immediately surrounding the extruding nucleus. Differences in the amount of transferrin binding to erythroid cells at various stages of development were measured by quantitative fluorescence microscopy. Maximal labeling was found at the basophilic normoblast stage, and the capacity to bind transferrin decreased 10-fold during maturation to the reticulocyte. The relative changes in transferrin binding during development were almost identical to those measured for concanavalin A binding employing the same technique. The results obtained by fluorescence microscopy on the binding of transferrin to erythroid cells were extended by electron microscopy using transferrin conjugated to ferritin. At this resolution transferrin-ferritin was seen to be concentrated in surface structures similar to coated pits and in intracellular vesicles after 5 min incubation at 37° C. By 20 min incubation, nearly all the transferrin conjugate internalized by early normoblasts was in vesicles and multivesicular bodies in close proximity to the Golgi complex. This region is probably the 'cap' observed by fluorescence microscopy and was characterized ultrastructurally by the presence of numerous mitochondria, multivesicular bodies, a centriole pair, and the absence of ribosomes. It was concluded from these results that transferrin enters erythroid cells by receptor-mediated endocytosis and that part of the intracellular pathway involves lysosome-like organelles.