Neomycin sulfate, 8 gm daily, induced lactose malabsorption and reduced disaccharidases after three days therapy. Stool lactic acids varied prior to and after neomycin; in some the lactic acid increased while decreasing in others. A study by light microscopy revealed invasion of the lamina propria with eosinophils and plasma cells while only minimal blunting of the villi appeared. Electron micrographs showed scattered ballooning and fragmentation of the microvilli. In some areas, there was a loss of microvilli and the fuzzy surface became disrupted. These findings suggest an early direct toxic action of neomycin on the bowel mucosa.