The morphology of budding and conjugating cells and associated changes in microtubules and actin distribution were studied in the yeast Xanthophyllomyces dendrorhous (Phaffia rhodozyma) by phase-contrast and fluorescence microscopy. The non-budding interphase cell showed a nucleus situated in the central position and bundles of cytoplasmic microtubules either stretching parallel to the longitudinal cell axis or randomly distributed in the cell; none of these, however, had a character of astral microtubules. During mitosis, the nucleus divided in the daughter cell, cytoplasmic microtubules disappeared and were replaced by a spindle. The cytoplasmic microtubules reappeared after mitosis had finished. Actin patches were present both in the bud and the mother cell. Cells were induced to mate by transfer to ribitol- containing medium without nitrogen. Partner cells fused by conjugation projections where actin patches had been accumulated. Cell fusion resulted in a zygote that produced a basidium with parallel bundles of microtubules extended along its axis and with actin patches concentrated at the apex. The fused nucleus moved towards the tip of the basidium. During this movement, nuclear division was taking place; the nuclei were eventually distributed to basidiospores. Mitochondria appeared as vesicles of various sizes; their large amounts were found, often lying adjacent to microtubules, in the subcortical cytoplasm of both vegetative cells and zygotes.