Advances have been made in the characterization of 5-HT-storing organelles of neurectodermal cells. The parafollicular cell of the thyroid has been used as a model. This cell stores 5-HT, shares many properties with neurons, and can be induced to change its phenotype from endocrine to neuronal by exposure in vitro to NGF. The membranes of isolated parafollicular 5-HT storage vesicles appear to contain a chloride channel that is gated in response to stimulation of the cells by secretogogues. Opening of this channel permits the interior of the vesicle to acidify in response to the action of a H+ ATPase in the vesicular membrane. Development of a delta psi appears to limit acidification of the vesicular interior when the chloride conductance is low. Transmembrane transport of 3H-5-HT into parafollicular vesicle is inhibited by dissipating the delta pH across the granular membranes. The physiological significance of the ability of parafollicular vesicles to modify the internal pH of their 5-HT-storing organelles remains to be determined. Like the synaptic vesicles of central and peripheral serotonergic neurons parafollicular vesicles contain a specific 5-HT binding protein, SBP. 5-HT storage organelles and SBP have been found in medullary thyroid carcinoma (MTC) cells, a tumor line derived from parafollicular cells. The cell biology of SBP is now under study utilizing the MTC cells.