The formation of the atherosclerotic lipid-rich core has been elucidated by electron microscopy of the core region in small, raised fibrolipid lesions. The relationship among lipid deposits, extracellular matrix, and cells found in distinct regions of the fibrolipid lesion was examined. Extracellular lipid droplets, verified by osmium-thiocarbohydrazide-osmium staining, made up approximately 40% of the lipid-rich core volume. The lipid droplets were often found distinctly associated with elastin and/or collagen; these associations were dependent upon the location examined within or near the lipid-rich core. Within areas of intense extracellular lipid deposits, crystalline clefts suggesting cholesterol monohydrate were observed. Stereologic analysis of the lipid-rich core components revealed marked reductions in the volume fractions of cells, reticular ground substance, and basement membrane; while the extent of extracellular lipid increased 7-10-fold. Eleven percent or less of lipid in the core region was found within cells, usually smooth muscle cells. Above the core region in the lesion cap, monocyte-macrophage foam cells were prominent. Cellular lipid droplets were much larger (profile diameters sixfold higher) than extracellular droplets. With these data as well as transitional morphologic features at the boundaries of the core region, it is suggested that the abundant extracellular lipid does not derive from cell necrosis, and lipid deposition in association with extracellular matrix constituents is an early event in the development of the lipid-rich core.