Trypan blue is a potent teratogen in vivo and in vitro in the rat. Many of the abnormalities produced by trypan blue--including swollen neural tube and pericardium, subectodermal blisters, hematomas, and generalized edema--may result from altered fluid balance in and around the embryo. The present study demonstrates relationships between changes in the fluid environment around the embryo and appearance of anomalies. Rat embryos were exposed in utero or in vitro to trypan blue during the early period of organogenesis. Both exposures resulted in defects that are typical of trypan blue treatment. Osmolality of exocoelomic fluid (ECF) was measured on gestation day 10 in vivo and day 12 in vitro, both after 48 hr of exposure to trypan blue. In both cases ECF osmolality was significantly lower than controls. This was correlated with the presence of edema-related anomalies in the embryo. On gestation day 11 in vivo, three days after maternal injection of trypan blue, ECF osmolalities were significantly higher than controls; however, there was tremendous variability in this parameter in day 11 treated embryos, and some had ECF osmolalities below the control range. Increased frequency of abnormalities was correlated with abnormal ECF osmolality, below and above the control range. Trypan blue probably exerts its teratogenic effects by disturbing the function of the visceral yolk sac. The movements of an amino acid and a monosaccharide across the visceral yolk sac were measured on gestation day 12 embryos in vitro. This aspect of yolk sac function was not altered by trypan blue exposure. Ultrastructure of the visceral yolk sac was observed after trypan blue exposure in vivo and in vitro. Endodermal cells in trypan blue-treated yolk sacs contained fewer large, electron dense lysosomes than controls. These were replaced by numerous small vacuoles, which may contain trypan blue. Trypan blue causes osmotic changes in the rat embryo in vivo and in vitro. These changes are correlated with embryonic malformations. Alterations in yolk sac ultrastructure indicate that trypan blue affects the function of this membrane.