The ultrastructural localization of acid phosphatase (ACPase) activity was examined in cultured human gingival fibroblasts in the formative and resorptive phases. In the collagen-secreting fibroblasts, weak ACPase activity was demonstrated in the lysosomes, inner Golgi cisternae, and condensing vacuoles, and none was found in the Golgi-associated endoplasmic reticulum-lysosome system (GERL), presecretory granules, or secretory granules. On the contrary, collagen phagocytosis induced strong ACPase activity in the GERL, which was in addition to the weaker activity found in the same sites as those in the collagen-secreting cells. At the same time, collagen secretion was suppressed, and dense elongated secretory bodies associated with ACPase activity accumulated within the cells. When collagen fibrils had been interiorized in whole or in part within the phagosomes, primary lysosome derived from the Golgi-GERL complex then fused with them to form phagolysosomes. Collagen degradation occurred within these bodies. the observations indicate significant differences in ACPase activity used as a marker for lysosomal enzyme activities in the different functional phases of fibroblasts. These results suggest that fibroblasts work only one way at a given time, viz., collagen synthesis or collagen degradation.