In granulation tissue produced in the rat by subcutaneous injection of turpentine oil or polyvynile sponge implantation, the great majority of fibroblasts (myofibroblasts) possess a contractile apparatus which makes them similar to smooth-muscle cells. Chemical analysis shows that these granulation tissues contain a high proportion of Type III collagen, a genetically distinct collagen normally associated with embryonic dermal tissue. Type III collagen may persist up to 9 months after sponge implantation and myofibroblasts are seen in granulation tissue by means of electron microscopy and immunofluorescence. When granulation tissue is resorbed 50 days after turpentine oil injection, myofibroblasts disappear and the dermis contains Type I collagen. The concurrent presence of myofibroblasts and Type III collagen suggests that myofibroblasts, in addition to their contractile activity, synthetize, at least in part, type III collagen.