Observations on the progressive course of retinal degeneration in canine ceroid lipofuscinosis (CCL) showed dramatic changes in enzyme activity and subcellular compartmentation. Thus, in affected animals, a new particle containing high levels of hexosaminidase and galactosidase was found in fractions lighter than seen in controls. In the later stages of disease and in normal aging, a progressive increase in dense fractions with high titers of acid lipase and acid phosphatase was observed. Peroxidase was found predominantly in the heavier fractions (1.24 to 1.28 gm/ml) and was lower than normal in affected retina and RPE. These fractions were located above the pigment granule fraction. Changes of peroxidase activity in the pigment granules were age dependent in controls, but a decrease of similar magnitude occurred much earlier in affected dogs. The accumulation of large numbers of dense bodies in the retina and RPE in CCL may indicate an impairment of intracellular digestive mechanisms. The early and marked reduction of peroxidase activity in affected dogs is an important indicator for major changes in the biochemistry of the entire eye in this disease. Therefore the initial pathogenic event seems to be the inability of affected cells to cope with peroxidative damage at an early stage, followed by an exaggerated attempt by the cells to digest accumulating lipopigments.