Vacuoles were observed by light microscopy in the smooth muscle cells of the media in normal rat arteries. By electron microscopy these vacuoles were limited by two membranes; they usually contained myelin figures, a few organelles (especially mitochondria and microfilaments), and an amorphous background material that varied greatly in density. Morphologic evidence indicates that these structures arise by herniation of one smooth muscle cell into another; it is presumed that herniation occurs during contraction at weak points corresponding to areas where adjacent cells come in close contact. Such cell-to-cell herniae were mostly seen in small arteries (arterioles) with a diameter of 0.4 to 0.2 mm; however, none was found in coronary arteries of this size. This discrepancy suggests that the pathogenesis of cell-to-cell herniae is correlated not only with the caliber of the artery but also with functional demands. (Am J Pathol 87:375-398).