Compared to cells from normal rabbit lungs, BCG-induced alveolar macrophages have a marked increase in hydrolase levels and the number of large electron-dense subcellular structures. This study was performed to investigate the possibility that these electron-dense structures were responsible for the increased hydrolase levels of these cells. Using sucrose gradient centrifugation, nuclei-free homogenates of normal and BCG-induced macrophages were analyzed with respect to the subcellular particles they contain. Gradient fractions were assayed for enzymes commonly associated with lysosomes as well as the mitochondrial cytochrome oxidase. Fractions of peak hydrolase activity from the BCG-induced preparations were consistently more dense than those from the normal cell preparations. Ultrastructural studies of the particulate material found in fractions of peak hydrolase activity from BCG-induced preparations revealed the presence of electron-dense, often dumbbell-shaped, granules. The data suggest that these peculiar granules are responsible for the elevated hydrolase levels of BCG-induced alveolar macrophages.