The free-swimming parenchymella larvae of Haliclona permollis have a surface of flagellated cells that function in locomotion. These flagellated cells disappear from the larval surface soon after larval settlement, but the debate about their fate during metamorphosis has not been resolved. An improved method for electron microscopy enabled us to visualize minute ellipsoid granules characteristic of the larval flagellated cells of this sponge and to use these granules as natural markers to follow the fate of flagellated cells in metamorphs. On metamorphosis, the axonemes of the flagellated cells are withdrawn into the cell body and persist for some time, thus serving as a second natural marker for flagellated cells in postlarval forms. Within 12 h after settlement, the metamorphs have both markers in amoeboid cells derived from flagellated cells. The minute ellipsoid granules are found in the amoeboid cells of the metamorphs 24 h after settlement, and in the choanocytes of the juveniles 36 h after settlement. Therefore, it is proposed that the choanocytes derive from the larval flagellated cells by way of an amoeboid cell stage. These results suggest that the flagellated cells of parenchymella larvae participate in the formation of juveniles.