We studied ultrastructurally the development of rabbit corneal endothelium from the 13th day of gestation to 3 days after birth. Precursor corneal endothelial cells, stromal cells, and a vascular network migrate in close association with each other between the developing corneal and lens epithelia. During development, newly deposited extracellular fibrous matrices separate the prospective endothelium from the capillaries and corneal stroma. The extracellular matrix between the apical endothelial surface and the vascular network loses its fibrous appearance early in development. Simultaneously, randomly organized fibrils are deposited on the basal endothelial surface facing the stroma. These fibrils, gradually obscured by the deposition of a nonfibrous component, eventually become part of Descemet's membrane. Early in development, prospective endothelial cells cannot be distinguished morphologically from the overlying corneal stromal cells. Morphologic differentiation of the endothelial cell is characterizd by the formation of sinuous lateral borders that interdigitate with those of adjacent cells to form a continuous single-cell layer of tissue. The basal endothelial membrane forms a pitted surface, distinguishing it from the apical cell membrane. Intercellular junctions between lateral membranes, a cilium projecting into the anterior chamber, and deposition of Descemet's membrane on the basal endothelial surface contribute to the polarization of the endothelium. Throughout most of corneal development the vascular pupillary membrane maintains a close association with the apical surface of the differentiating endothelium. We conclude that fetal corneal endothelium develops within a complex extracellular matrix environment and in proximity to the underlying vascular network. These structures play an important role in the morphogenesis of corneal endothelium.