The periventricular region was studied in the brains of 129 cases of multiple sclerosis, with the purpose of establishing the mechanism and order of events in the development of the periventricular plaque, and deciding whether there is any relationship between granular ependymitis and such plaques. Periventricular plaques were found in 82.2% of cases. Observation and computerized morphology showed that the early stage of the periventricular plaque is the formation of a lesion around a subependymal vein and that adjacent lesions later coalesce. These plaques do not appear to arise from the ependyma, which is against any role for the CSF in their initial development. Chronic or burnt-out periventricular lesions often show overlying granular ependymitis (10.9% of cases) and subependymal gliosis (17.8%), presumably as a result of the long-continued low-grade inflammatory process. This process, which is not specific for multiple sclerosis, is sometimes associated with transfer of IgG and C3, as shown with peroxidase methods, across the subependymal vein wall and the ependymal epithelium. Increased permeability of the inflamed ependyma constitutes a possible abnormal entry route from plaque to CSF or, in reverse, from CSF to brain.