The second phase of gastrulation in the sea urchin embryo, secondary invagination, involves a dramatic elongation of the tube-like gut rudiment. The cells in the wall of the rudiment, which are organized as a monolayered epithelium, change their arrangement during this process. The number of cells in the wall of the gut rudiment at any given level along its long axis decreases markedly as determined by light microscopy of serial cross sections and by scanning electron microscopy, an observation that can be accounted for only if some of the cells exchange nearest neighbors during secondary invagination. Transmission electron microscopy reveals that cell rearrangement takes place despite the continued presence of typical intercellular junctional complexes. In addition to undergoing rearrangement, the cells in the wall of the gut rudiment change their shape during secondary invagination, becoming more flattened. These data raise the possibility that mechanisms other than the contraction of the filopodia of the presumptive secondary mesenchyme cells contribute to the second phase of invagination in the sea urchin embryo. In addition, the observation that cells in the wall of the gut rudiment undergo rearrangement during secondary invagination provides additional evidence that epithelial sheets can exhibit fluid-like properties during morphogenesis.