Experimental canine peritonitis was produced in 14 dogs by appendiceal ligation. Phagocytic activity in blood and peritoneal fluid was examined during the peritonitis and following surgical intervention. In nine dogs, the gangrenous appendix was resected after 43 hours, the peritoneal cavity was irrigated, and fibrinous exudate debrided. The remaining five dogs were not tested. Leukocytes in blood and peritoneal fluid were counted preligation and at 24, 43, 46, and 55 hours postligation. Polymorphonuclear leukocytes (PMNs) predominated. Phagocytosis and killing of Candida tropicalis by blood and peritoneal PMNs were assayed by a coverslip method. As sepsis progressed, phagocytosis by blood PMNs declined and at 43 hours was 60 per cent of the preoperative level. After resection of the gangrenous appendix, phagocytic activity returned to 90 per cent of preoperative levels at 12 hours postresection. Peritoneal PMNs exhibited a similar, but more depressed pattern of phagocytic activity. Phagocytosis in five sham-operated dogs was unchanged. Thus, phagocytosis by blood and peritoneal PMNs was depressed in peritonitis and was restored following surgical treatment.