A symbiosis between a gorgonian coral, Pseudoplexaura flagellosa (Houttuyn) and a filamentous green alga results in spongy nodules on the coral host. Morphological and histochemical differences between the normal and algal-infected coral were studied, using transmission electron microscopy and histochemistry. The algal filaments located within the host skeleton are covered with skeletal laminae. The infected skeleton is structurally abnormal and only remants of the mesogleal region adjacent to the skeleton remain. Acidic mucopoly-saccharide substances are associated with these areas. Host granulocytes are located in the mesoglea adjacent to the infected skeleton. These cells release vesicles that attach to algal filaments extending into the tissue zone. These host cells also stain positively for tyrosine and polyphenols which are known to be associated with the production of Pseudoplexaura skeleton. Granulocytes coat the algae and secrete skeletal-like material about them, therefore, participating in an encapsulation mechanism in defense of the host.