Two strains of callus have been isolated from bean hypocotyl and grown on a defined maintenance medium supplemented with 2 mg/l. 2:4-dichlorophenoxyacetic acid (2:4D) and 2% sucrose. Root initiation was observed in one strain and formation of nodules containing xylem and phloem in both strains after transfer to an induction medium supplemented with 1 mg/l. naphthyleneacetic acid, 0-2 mg/l. kinetin and 3% sucrose, after 3 transfers to maintenance medium. The number of nodules per gramme increased 10-fold between 6 and 12 days after transfer, and thereafter remained constant. Phenylalanine ammonia lyase (PAL) activity rose to a maximum value when the rate of nodule formation was greatest, and decreased after the maximum nodule concentration was reached. The final constant value for PAL activity was above that of callus grown on maintenance medium. Beta I leads to 3 glucan synthetase activity rose to a maximum 15 days after transfer, and then fell gradually to a level above that measured in callus on maintenance medium. Callus was transferred from maintenance medium after 3, 4, 5 and 6 transfers. The concentration of nodules after 21 days on induction medium decreased as the callus was kept in culture. No further differentiation could be induced after 6 transfers. The fall in nodule formation was paralleled by a decrease in PAL and betaI leads to 3 glucan synthetase activities measured 21 days after transfer.