Mean serum lysozyme values were found to be elevated in untreated leprosy patients. Statistically significant elevations were present in each of the three major categories of leprosy, tuberculoid, borderline, and lepromatous. Values were particularly high in patients with severe reversal reactions or Lucio's phenomenon. Prolonged sulfone therapy was associated with a fall in serum lysozyme values. With an immunoperoxidase method to localize lysozyme in leprous tissues, two distinct staining patterns were found, granular and saccular. The grandular pattern of lysozymal staining was found in epithelioid cells and in giant cells, and the intensity of staining showed a positive correlation with serum lysozyme levels. Conversely, a saccular pattern of lysozymal staining was found in lepromatous histiocytes, buth the intensity of staining was unrelated to serum lysozyme levels; the saccular structures contained dense aggregates of Mycobacterium leprae. These two patterns of staining probably represent different functional responses of monocyte-derived granuloma cells, whereas the serum levels reflect, to a varying degree, both the absolute number of such cells and the rate of secretory activity of this cell population as a whole.