This report describes a novel system for the study of the development and function of human intestine. Human fetal bowel transplanted into a subcutaneous tunnel on the back of athymic nude (nu/nu) mice develops a new microcirculation within 4 weeks. Tissues undergo morphological development, become similar to adult human bowel tissue, and may survive for 6 months after transplantation. Monoclonal antibody immunoperoxidase staining shows that the epithelial and some endothelial elements are of human phenotype, but the circulating blood cells and migrating mucosal lymphocytes are of mouse origin.