Four variants of Kranz anatomy occur in the Cyperaceae. Three of these anatomical types (fimbristyloid, chlorocyperoid, and eleocharoid) are unique among taxa with C(4) photosynthesis in that the photosynthetic carbon reduction tissue (PCR, functional equivalent of bundle sheath) is located within the vascular strand and is separated from the primary carbon assimilation tissue (PCA, positional equivalent of mesophyll) by the mestome sheath layer. In the fourth anatomical type, rhynchosporoid, PCR tissue is located in the position of the mestome sheath. In this study, we compared two aspects of development of PCR and PCA tissues in representatives of the C(3) and C(4) types: (1) ontogenetic derivation and (2) cellular differentiation. Analysis of the planes of cell division associated with procambial strand formation indicated that PCR tissue is always derived from the procambium, while PCA tissue is derived from the ground meristem. These cell lineages remain distinct after the initial organization of vascular strands. Analysis of cell differentiation using accumulation of cell-type-specific photosynthetic enzymes as markers of differentiation indicated that, with one exception, a low level of non-cell-specific enzyme accumulation preceded abundant and cell-specific accumulation of photosynthetic enzymes at the distal end of the leaf elongation zone. Enzyme accumulation coincided spatially (and temporally) with structural aspects of cell differentiation. Previous cladistic analyses have indicated that these anatomical types represent separate evolutionary origins of the C(4) pathway, and the differences in developmental pathways observed here reflect these independent origins from C(3) ancestors.