Lungs of fetal and neonatal lambs were found to contain small, inconspicuous and widely dispersed neuroepithelial bodies (NEB). Under the light microscope, NEB could only be identified with certainty by their positive immune reaction to antibodies against serotonin. At the ultrastructural level, a large number of dense-cored vesicles was found in the corpuscular cells of the NEB. However, the number of intracorpuscular nerve endings was small. We conclude from these findings that, in the lamb, NEB act primarily as local regulators of lung function and that their reflex-mediated actions may be of secondary importance. This may be related to the fact that lungs of lambs at birth are relatively mature compared to those of various other species. Increased maturation of lungs and a concomitant decreased risk of insufficient oxygenation might be associated with the presence of an oxygen-sensitive chemoreceptor with primarily local actions for prevention of hypoxia.