The absorption in vitro at 37°C of a micellar solution composed of fatty acid, monoglyceride and bile salt into rings of hamster small intestine was studied with special reference to the initial entry of lipid into the epithelial cells. During the incubation of small intestinal rings in a micellar solution at 37°C, the brush border plasma membrane changes from an asymmetric triple-layered structure to a symmetrical triple-layered structure. Finely dispersed material is found attached to the surfaces of the plasma membrane. Intracellularly the absorption process appears to proceed as in vivo, for globular fat is first found within smooth-surfaced apical vesicles below the terminal web region of the cells. The membrane of these vesicles is not of the plasma membrane type. Indentations between microvilli as well as small vesicles within the terminal web region each bounded by a membrane of the plasma membrane type are found with about the same frequency in both absorbing and nonabsorbing cells. The ultrastructural changes in the peripheral layer of the brush border plasma membrane are interpreted as representing the incorporation of micellar material into the surface of the membrane. This would be the first step in the absorption of digested lipid by the intestinal epithelial cells. The small 50 Å particles found over sections which are stained with lead citrate appear to be lead precipitates.