The cellular features of the ascidian Molgula retortiformis (Verrill, 1871), a direct developing species, were investigated with the aid of transmission electron microscopy, histochemistry, and immunocytochemistry. Developmental comparisons between direct and indirect developing ascidians will further our understanding of how developmental processes evolve. M. retortiformis eggs are surrounded by a follicular envelope comprising a layer of outer follicle cells attached to an acellular chorion. The cytoplasm of M. retortiformis eggs contains large quantities of yolk and glycogen. Immediately after hatching, at day 2.5 of development, the cells constituting a juvenile exhibited similar ultrastructural features, except that the larger, deeper cells contained more yolk and glycogen than the epidermal cells. Differentiated muscle cells were absent in newly hatched M. retortiformis juveniles, and acetylcholinesterase (AChE) activity was not detected. Immunocytochemistry experiments using a vertebrate intermediate filament antibody (NN18) support the idea that the failure of newly hatched M. retortiformis juveniles to develop muscle cells may be due to the absence of a factor localized in the egg myoplasm. This paper concludes with a discussion of the "substrate hypothesis" and the evolution of ascidian direct development.