We have studied by electron microscopy and immunocytochemistry the formation of secretory granules containing adrenocorticotropic hormone (ACTH) in murine pituitary cells of the AtT20 line. The first compartment in which condensed secretory protein appears is a complex reticular network at the extreme trans side of the Golgi stacks beyond the TPPase-positive cisternae. Condensed secretory protein accumulates in dilated regions of this trans Golgi network. Examination of en face and serial sections revealed that "condensing vacuoles" are in fact dilations of the trans Golgi network and not detached vacuoles. Only after presumptive secretory granules have reached an advanced stage of morphological maturation do they detach from the trans Golgi network. Frequently both the dilations of the trans Golgi network containing condensing secretory protein and the detached immature granules in the peri-Golgi region have surface coats which were identified as clathrin by immunocytochemistry. Moreover both are the site of budding (or fusion) of coated vesicles, some of which contain condensed secretory protein. The mature granules below the plasma membrane do not, however, have surface coats. Immunoperoxidase labeling with an antiserum specific for ACTH and its precursor polypeptide confirmed that many of the coated vesicles associated with the trans Golgi network contain ACTH. The involvement of the trans Golgi network and coated vesicles in the formation of secretory granules is discussed.