Hypoxia is known to cause pulmonary hypertension with an increase in arterial muscle-both hypertrophy of the medial coat of the normally muscular arteries and development of new muscle more peripherally than is normal--and a decrease in the number of small arteries. The present study descirbes the ultrastructural features of these changes. Pulmonary arteries less than 100 microgram. in diameter after distension and including alveolar capillaries and the muscular arter at the hilum were examined after exposure to 380 torr for between 1 and 52 days. The earliest change, detected from day 2, is the appearance of new muscle in the nonmuscular regions of artery. The position of the new muscle internal to the single elastic lamina and immediately subjacent to endothelium distinguished it from normal muscle. Ultrastructural examination shows not an "extension" of muscle along a pathway, but differentiation to form new muscle, by preexisting cells--by the pericyte in the nonmuscular arteries and by the intermediate cell in the partially muscular. The veins are spared. Endothelial cells also change significantly from day 3. In the normally nonmuscular regions of artery and in the alveolar capillaries, they are thickened. In the nonmuscular regions of artery, although the endothelial cells appear edematous, the number of Weibel-Palade bodies is increased and new muscle appears subjacent. Elsewhere the Weibel-Palade bodies show normal distribution. The extreme narrowing of the lumen caused by thickened endothelial cells and by encroachment of new muscle as well as the finding of capillaries that are no longer patent doubtless explain the reduction in small peripheral areteries.