Rhodamine-phalloidin was microinjected into early stage Drosophila embryos, which were then allowed to develop for various times, fixed, and examined by fluorescence microscopy. A gradient of effects was seen. Close to the site of injection an area of diffuse bright fluorescence was found which included lumps and long strands of fluorescent material. Around this region particular cytoplasmic domains showed a denser F-actin distribution. These domains included the nuclear islands of the preblastoderm, the cortical caps of the syncytial blastoderm, and the contractile ring network which forms during cellularization of the blastoderm. It is proposed that these domains are regions of preferential actin polymerization under the appropriate cellular conditions and that the injected phalloidin causes incorporation of additional polymer into existing structures. Further away the pattern of phalloidin staining corresponded to that found with fixed material. In contrast to the domains of apparent additional F-actin polymerization a reduction of actin incorporated into small aggregates was found, both in syncytial blastoderm stages and during cellularization. This occurred in regions where additional actin had been incorporated into adjacent actin-rich structures. A storage role for the aggregates, which are depleted when F-actin is polymerized, is proposed. Both mitosis and cytokinesis were found to be slowed but the inhibition was only transient. However, most embryos died without differentiating. Rarely, differentiated tissues formed and the musculature was strongly stained by rh-phalloidin. When embryos were injected immediately prior to the start of cellularization cytokinesis was inhibited only locally and continued normally elsewhere. This finding argues against the hypothesis that contraction of an actomyosin network over the whole surface is the only force involved in the cellularization of the blastoderm and that local factors, e.g., plasmalemma extension, must be involved.