We investigated how the transcribing ribosomal genes ("Christmas trees") of HeLa cells are arranged in the nucleolus. Hypotonic conditions let the granular component disperse, while fibrillar centres and parts of the dense fibrillar component were resistant to low ionic strength conditions. Both remained within the former nucleolar territory. We used immunocytochemistry and in situ hybridisation at the light microscopic and ultrastructural level for the analysis of the internal nucleolar structures. The 5' ends of ribosomal RNA and ribosomal DNA sequences were found associated with the periphery of fibrillar centres. The hypotony-resistant parts of the dense fibrillar component did not contain the 5' end of the transcript or the gene. The downstream ribosomal DNA sequences were found in the nucleolar territory but not associated with any hypotony-resistant structures. The downstream ribosomal RNA revealed a similar distribution. We show that transcription initiation and transcript elongation occur in different molecular and structural environments. Transcription initiation is located at the periphery of fibrillar centres. Evidently the dense fibrillar component is non-homogeneous in molecular composition. Transcript elongation is continued in a part of the dense fibrillar component which is dissolved under intermediate hypotonic conditions. A structural model of nucleolar transcription is suggested.