Cells capable of reacting with sheep erythrocyte (SRBC) antigen to maturate and produce hemolysin appear simultaneously in the bone marrow and spleen of 1-day old Swiss-Webster mice. However, hemolysin-producing cell clones (HPCC) do not result. Complete functional precursor units generally appear in the spleens of mice older than 3 days. In vivo and in vitro data correlate well in this regard. Complete precursor units are not seen in the bone marrow and only very rarely in the thymus. The efficiency of precursor units of neonatal mice when they become functional approximates that of the mature animal when based on the doubling time of plaque-forming cells (PFC). Possible explanations of the initial appearance of incomplete precursor units have been discussed.