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The accumulation of periodic acid Schiff (PAS)-positive material in the epithelium in microvillous atrophy (MVA) is diagnostic but unexplained. It occurs earlier in the epithelial life cycle than the formation of microvillous inclusions and warrants further investigation.Scanning photometry was used to assess the distribution of the PAS-positive material within epithelial cells and to assess how this changed with position on the crypt–villus axis. Thiery staining was applied to test the PAS positivity of the secretory granules, and quantitative ultrastructural morphometry was used to study secretory granule distribution in the epithelium.The PAS abnormality arose in upper crypt epithelium in congenital and late-onset MVA and continued up the villus. Thiery staining demonstrated that the secretory granules were PAS positive. Quantitative morphometry showed that secretory granules in congenital MVA were predominantly present in upper crypt and declined in the low villus. In late-onset MVA, secretory granules arose in the upper crypt but predominated in the low villus region. No evidence of secretory granule coalescence with the apical membrane was seen, although evidence of crinophagy was observed. Secretory granule profiles were seen, indicating that they formed part of a membrane-bound vesicular network within the cell, rather than existing simply as discrete bodies. The Golgi complex appeared normal.The secretory granules are responsible for the PAS-positive staining in upper crypt and low villus regions in MVA. They appear to form an intracytoplasmic vesicular network, undergo crinophagy, and decline in prominence in the low to midvillous region. The absence of evidence of coalescence with the apical membrane indicates that the secretory granules arise from a post-Golgi block in exocytosis rather than from endocytosis of gut luminal contents. Periodic acid–Schiff positivity in upper villous regions arises from microvillous inclusions and lysosomal bodies.