The differentiation of sieve and tracheary elements was studied in callus culture of Daucus carota L., Syringa vulgaris L., Glycine max (L.) Merr., Helianthus annuus L., Hibiscus cannabinus L. and Pisum sativum L. By the lacmoid clearing technique it was found that development of the phloem commenced before that of the xylem. In not one of the calluses was differentiation of tracheary elements observed in the absence of sieve elements. The influence of indole-3-acetic acid (IAA) and sucrose was evaluated quantitatively in callus of Syringa, Daucus and Glycine. Low IAA levels resulted in the differentiation of sieve elements with no tracheary cells. High levels resulted in that of both phloem and xylem. IAA thus controlled the number of sieve and tracheary elements, increase in auxin concentration boosting the number of both cell types. Changes in sucrose concentration, while the IAA concentration was kept constant, did not have a specific effect on either sieve element differentiation, or on the ratio between phloem and xylem. Sucrose did, however, affect the quantity of callose deposited on the sieve plates, because increase in the sucrose concentration resulted in an increase in the amount of callose. It is proposed that phloem is formed in response to auxin, while xylem is formed in response to auxin together with some added factor which reaches it from the phloem.