When 2 horses were dosed with cultures of a Fusarium moniliforme isolate that had previously caused only hepatosis, 1 developed brain oedema and hepatosis, and the other only leukoencephalomalacia. A 3rd horse developed both leukoencephalomalacia and hepatosis after being dosed with another isolate obtained from maize which was associated with a natural outbreak of the nervous form of the disease. Since leukoencephalomalacia and hepatosis could be induced by the same culture material, it was concluded that both syndromes were manifestations of the same toxicosis. There was also some evidence that leukoencephalomalacia might be specifically induced by the administration of smaller doses of the culture material to horses over a longer period. The clinical signs of nervous disorder included ataxia, paresis, apathy, hypersensitivity, frenzy, and other locomotory and psychic disturbances. Autopsy showed that the brains were oedematous, and focal areas of liquefactive necrosis were present in the cerebral white matter. In 1 case the malacic areas were not confined to the subcortical white matter but were microscopically visible in the cerebral cortex as well. An histopathological examination of the areas bordering on the malacic areas revealed rarefication of the white matter, perivascular haemorrhages, oedema and cellular infiltration composed mainly of plasma cells and eosinophiles. Many of the macrophages in these areas contained lipfuscin-like granules, but these granules also occurred extracellularly in the neuropil. In the layers of the cortex nearest the malacic areas, satellitosis and neurophagia were commonly seen.