Elongation of mammary ducts in the immature mouse takes place as a result of rapid growth in end buds. These structures proliferate at the apex of elongating ducts and are responsible for penetration of the surrounding adipose stroma; by turning and branching, end buds give rise to the characteristic open pattern of the mammary ductal tree. We have used a variety of techniques to determine the cellular and structural basis for certain of these end bud activities, and now report the following. (1) The end bud tip is covered with a monolayer of epithelium, the "cap cells," which are characterized by a relative lack of intercellular junctions and other specialized features. (2) The cap cell layer extends along the end bud flank and neck regions where it is continuous with the myoepithelium which surrounds the subtending mature duct. A linear sequence of differentiative changes occur in the cap cells in this region as they progressively alter in shape and accumulate the cytological features of mature myoepithelium. Cap cells may therefore be defined as a stem cell population providing new myoepithelial cells for ductal morphogenesis and elongation. (3) Differentiation of cap cells into myoepithelium is associated with conspicuous changes in the basal lamina. At the tip, cap cells form a 104-nm lamina similar to that described in expanding mammary alveoli and in embryonic tissues. Along the end bud flanks the basal lamina is raised from the cell surface and extensively folded, resulting in a greatly thickened lamina, measuring as much as 1.4 microns. At the surface of the subtending ducts the lamina becomes structurally simplified and resembles that at the tip, but has a significantly greater thickness, averaging 130 nm. (4) The codifferentiation of myoepithelium and its basement membrane is associated with changes in the surrounding stroma. Undifferentiated mesenchymal-like cells attach to the surface of the basal lamina in the midportion of the end buds and become increasingly numerous in the neck region, forming a monolayer over the myoepithelial basal lamina. These stromal cells progressively differentiated into fibrocytes which participate in collagen fibrillogenesis and give rise to the fibrous components of the stroma surrounding the mature duct.