Perivascular cells in CNS tissue from six multiple sclerosis (MS) patients and a patient with motor neuron disease were examined by light and electron microscopy. Lymph node tissue from one MS patient was also examined. CNS perivascular macrophages in both MA and motor neuron disease were found to closely resemble free macrophages elsewhere in the body except that they often contained unusually large primary lysosomes. Cytoplasmic inclusions consisting of membrane-bound stacks of curved linear profiles, presumed to be a product of myelin degradation, were constantly observed in microglia in MS plaques but were rarely observed in perivascular macrophages in the same area. Unidentified cylindrical bodies were observed within cysternae of rough endoplasmic reticulum in some lymph node cells. Quantitative studies of the perivascular cell population in one MS case revealed, in histologically normal white matter 260 lymphocytes and 178 plasma cells per cubic millimeter of fresh tissue. Typical chronic plaque tissue without obvious inflammatory cell cuffing contained 1772 plasma cells per cubic millimeter of fresh tissue. No plasma cells were observed in the CNS in motor neuron disease. The results of this study suggest that perivascular macrophages in the CNS represent a specialized population of monocyte-derived free macrophages, that these cells differ functionally from microglial cells, and that the digestion of myelin breakdown products in MS requires the participation of both cell types. The results also suggest that in some chronic MS cases there is a large, permanent population of CNS plasma cells that persists, like the elevated cerebrospinal fluid IgG level in this disease, for the life of the patient, that these cells, rather than inflammatory cells in fresh lesions, are the major source of this raised IgG, and that the existence of such a population of cells may indicate the continuing expression of antigens in chronic MS lesions in the absence of fresh lesion formation.