A 32-wk-gestation female with type II achondrogenesis-hypochondrogenesis has been studied. The clinical features were typical, and radiographs revealed short ribs, hypoplastic ilia, absence of ossification of sacrum, pubis, ischia, tali, calcanei, and many vertebral bodies; the long bones were short with mild metaphyseal flaring. The femoral cylinder index was 6.3. Comparison with previous cases placed the patient toward the mild end of the achondrogenesis-hypochondrogenesis spectrum (Whitley-Gorlin prototype IV). Light microscopy revealed hypercellular cartilage with decreased matrix traversed by numerous fibrous vascular canals. The growth plate was markedly abnormal. Ultrastructural studies revealed prominently dilated rough endoplasmic reticulum containing a fine granular material with occasional fibrils in all chondrocytes. Immunohistologic studies indicated irregular large areas of cartilage matrix staining with monoclonal antibody to human type III collagen. The relative intensity of matrix staining for type II collagen appeared diminished. More striking, however, were intense focal accumulations of type II collagen within small rounded perinuclear structures of most chondrocytes but not other cell types. These results strongly suggest intracellular retention of type II collagen within vacuolar structures, probably within the dilated rough endoplasmic reticulum observed in all chondrocytes by electron microscopy (EM), and imply the presence of an abnormal, poorly secreted type II collagen molecule. Biochemical studies (see companion paper) suggest that this patient had a new dominant lethal disorder caused by a structural abnormality of type II collagen.