It has proved possible to transform an extreme rough variant of pneumococcus back to the rough state by the action of the desoxyribonucleate fractions of either rough or Type III smooth pneumococci. In a second step, the rough pneumococci produced by this transformation were further changed to the Type III smooth state by means of the desoxyribonucleate fraction of Type III smooth organisms. With use of the Type III desoxyribonucleate, the two steps could be accomplished successively, but not simultaneously, during the growth of a single inoculum of the extreme rough form. These findings have been interpreted as indicating that the desoxyribonucleic acid fraction of Type III smooth pneumococci contains two transforming principles of differing specificity, while the same fraction of rough pneumococci contains but one of these principles. Two distinct spontaneous variants of Type III smooth pneumococci have been isolated which seem to differ from normal Type III smooth pneumococci in synthesizing smaller amounts of the specific polysaccharide. Tests have indicated that these variant Type III races differ from the normal in possessing altered Type III transforming principles. Each of the new transforming agents when influencing rough bacteria, is strictly specific in its action, inducing as it does the formation of the corresponding variant Type III pneumococci. Interaction between the two new transforming principles and rough pneumococci can lead to the production of normal Type III organisms, although neither principle alone can do it. This is interpreted as indicating that the two mutated Type III transforming principles are qualitatively different from each other. Another kind of two-step transformation was accomplished by converting rough pneumococci first into the variant Type III pneumococci which produced very little specific polysaccharide, and then by transforming these latter into normal Type III organisms. After the two-step transformation of the extreme rough pneumococcus, both transforming principles used to effect this can be recognized in the Type III smooth pneumococci finally recovered. By contrast, in the two-step transformation of the rough pneumococcus by way of an intermediate smooth form, only the second transforming principle can be obtained from the resulting fully smooth organisms. The meaning of these facts is discussed.