Dipeptidyl aminopeptidase II (DAP II) was demonstrated cytochemically in rat peritoneal mast cells. The bright red reaction product in smears of peritoneal wash fluid tended to be localized in one to eight granules in the perinuclear region of the cell. This finding was confirmed at the electron microscopic level, where a small proportion of the granules, most often located near the nucleus, revealed electron opacity indicative of DAP II. Focal areas in the nuclear envelope densified by DAP II reaction product resembled reactive foci observed previously in the nuclear envelope of peritoneal macrophages. In mast cells exposed 1 to 2 hours to phosphate-buffered saline containing horseradish-peroxidase--coated colloidal gold, the spherules of gold were internalized and transported exclusively to the DAP II-reactive granules. Their content of endocytosed gold thus identified DAP II-reactive granules as secondary lysosomes of heterophagic nature. Mast cells induced to release their granules by stimulation with the divalent cation ionophore A23187 retained exclusively those granules possessing DAP II or acid phosphatase reactivity. This selective granule retention after ionophore exposure further differentiated granules with DAP II reactivity from the other non-reactive mast cell granules, presumably indicating a difference between the limiting membrane of granules that are converted to secondary lysosomes and the membrane of those that are not altered and persist as primary lysosomes. Demonstration of the DAP II reactivity in a minority of mast cell granules and of the heterophagic nature of these granules provides evidence that tissue mast cells in vivo function in endocytic activity by transporting material of extrinsic origin to some of their granules which are thereby transformed to heterophagic bodies or constitute previously existing heterophagosomes.