Lysosomal acid lipase is a hydrolase essential for the intracellular degradation of cholesteryl esters and triglycerides. In the laboratory, rats with congenital deficiency of lysosomal acid lipase and marked accumulation of cholesteryl ester, cholesterol free and triglyceride in livers (Wolman's disease rat or Yoshida rat) that corresponded to human Wolman's disease were found and maintained. The morphological characteristics of accumulated lipids in the livers of affected rats were examined also. Many small lipid droplets and lipid crystals were found in the cytoplasms of hepatocytes and ED1-positive and ED2-positive foamy Kupffer's cells, respectively. Electron microscopically, many electron-lucent lipid droplets with limiting membrane were found in hepatocytes. Foamy Kupffer's cells had many multivesicular bodies with limiting membrane, which contained crivilinear bodies, lipid droplets and crystal clefts. At areas of aggregation of foamy Kupffer's cells forming islets, there were many desmin-positive Ito cells. Small lipid droplets with limiting membrane were also found in the cytoplasm of Ito cells and endothelial cells. These findings, which were obtained by morphological methods, indicated that triglyceride and both cholesteryl ester and free cholesterol accumulated in lipolysosomes mainly in hepatocytes and Kupffer's cells, respectively, and suggest that lysosomal acid lipase could participate in dissolution of the membrane.