Resting cells of Melosira granulata (Ehr.) Ralfs were collected from the anoxic sediments of Douglas Lake, Michigan. Sediment containing M. granulata was inoculated into distilled water and incubated in a growth chamber for one week during which observations were made on the cytological differentiation process. Cells classified as "condensed," i.e. containing a dark brown cytoplasmic mass were identified as resting cells. The differentiation process consisted of a series of gradual cytological changes that included elongation of the cytoplasmic mass and recognition of definable organelles to the point where the cells were non-distinguishable from water column vegetative cells. Differentiating cells accumulated large polyphosphate and lipid granules. However, these granules disappeared just prior to cell division. The complete differentiation or rejuvenation sequence occurred in some cells in less than 24 h. However, not all dormant cells rejuvenated at the same time and it was observed that the lag period for rejuvenation increased with resting cell age (depth of burial in sediments). In the C14 uptake studies, label was initially observed in condensed state cells. The label gradually progressed to the more differentiated forms. Total carbon uptake during the rejuvenation process was initially lower in the rejuvenating cells, but roughly equal to water column populations after 8 h, indicating a period of high metabolic activity in the rejuvenating cells between 1 and 8 h.