Implantation of 7,12-dimethylbenz(a)anthracene (DMBA) into the pancreas of rats has been shown to induce adenocarcinoma. Complexes of tubules, which have the appearance of proliferated intralobular ducts, frequently appear during tumor development. These complexes were studied by light and electron microscopy to determine their method of formation. In addition, a tubular complex was reconstructed from serial sections to determine its three-dimensional configuration. Although tubular complexes have been thought by others to result from ductal proliferation, the following observation indicate that they originate from zymogen-granule-containing cells: a) there is a continuum of transitional stages between acini and tubules, b) most tubules decrease in size and are replaced by connective tissue (evidence of regression rather than proliferation), c) few mitotic figures are seen in tubular complexes, d) the tubules comprise many cells which have an abundance of rough endoplasmic reticulum, an organelle which is sparce in ducts, and e) the three-dimensional arrangement of tubules appears identical to the branching, anastomosing arrangement of zymogen-granule-containing cells of the normal rat pancreas. Control animals in which only sutures were placed in the pancreas showed minimal reaction. It is concluded that "acini" become recognized as tubules when loss of zymogen granules accompanies tumor induction by DMBA. Transformation of these cells could be erroneously interpreted as transformation from proliferating ducts.