In southern Brazil, cattle are affected by a disease known locally as Lechiguana and characterized by large subcutaneous swellings. Eighteen cases were examined clinically; 17 of the cattle had a single swelling, and one had two swellings. In 14 of the 18 cases, the swellings were located over the scapula and adjacent regions. The subcutaneous masses reached maximum dimensions of 45 x 50 cm, with heights above the skin surface of 5-25 cm. Growth was rapid, often taking place in 15 to 60 days. Histologically, all lesions were focal proliferative fibrogranulomatous panniculitis and consisted of focal proliferation of fibrous tissue that was infiltrated by plasma cells, eosinophils, lymphocytes, and sometimes neutrophils. An eosinophilic lymphangitis was also present, which sometimes resulted in the destruction of the lymphatics and the formation of eosinophilic microabscesses. Small granulomas, sometimes containing radiating clubs, and Splendore-Hoeppli material were present in the regional lymph node. Pasteurella granulomatis was isolated from the subcutaneous masses of 14 of the 18 natural cases. All 11 of these cases recovered following treatment with 3 g of chloramphenicol daily for 5 days. Untreated animals died. Because the area of anatomic distribution is similar to that infested by Dermatobia hominis, we postulate that this insect may transmit the causative agent. In one steer, a subcutaneous injection of P. granulomatis caused a large subcutaneous swelling consisting of interlacing bundles of collagen infiltrated by neutrophils, eosinophils, and some lymphocytes. Microabscesses, but not lymphangitis and granulomas, were detected. In all 11 cattle inoculated either intramuscularly or subcutaneously with P. granulomatis, purulent abscesses were produced at the sites of the injection, and P. granulomatis was recovered from all lesions.