Thymus glands of chicks with leukemia induced by BAI strain A (myeloblastosis) virus were fixed in cold 4 per cent formaldehyde-sucrose. Frozen sections were incubated in the ATPase medium of Wachstein and Meisel and studied by light microscopy and electron microscopy. The ATPase activity of the virus is localized to the outermost membrane of the virus. The membrane of the blast-like cells of the thymus cortex from which the virus emerges, by budding, also possesses such activity. It appears likely that the outermost membrane of the virus is derived from the plasma membrane of these cells.