Merozoites of Plasmodium falciparum placed in culture medium with a 50% erythrocyte extract and supplemented with ATP and pyruvate differentiated extracellularly into early trophic forms. Erythrocyte extract prepared by sonication was found superior to extract prepared by freezing and thawing. Under the best conditions, up to 30% of the merozoites showed some development after 16 hr of incubation and approximately 5% developed into larger forms, often ring-shaped and occasionally showing pigment. The small as well as the larger forms took up the fluorescent dye rhodamine 123. Under similar conditions, partial further development was also obtained of young rings freed from their host cells. Again, the sonicated erythrocyte extract gave better development than the frozen-thawed extract, and ATP with pyruvate had a marked favorable effect. These parasites had both a plasma membrane and a surrounding closely apposed parasitophorous membrane, whereas the forms derived by extracellular development of merozoites had only their plasma membrane. We conclude that initial development requires neither an intact erythrocyte nor a parasitophorous membrane.