Phagocytosis of Cryptococcus neoformans by human neutrophils and monocytes was studied, and intracellular killing was documented for the first time. Killing of C. neojormans by neutrophils was maximal by 2 hr. Ingestion appeared to be the major factor limiting intracellular killing of the organism. Phagocytosis by neutrophils was not greatly altered by specific antibody or by clinically common concentrations of soluble capsular polysaccharide but was markedly affected by size of cryptococcal capsules. Killing mechanisms of neutrophils appeared to require the generation of H₂0₂. That myeloperoxidase activity was also required for normal rates of cryptococcal killing by neutrophils was evidenced by a lag in killing by sodium azide-treated cells. Ingestion of C. neojormans by monocytes was not affected by capsule size, but killing was less efficient. While repeated determinations in the same individuals were extremely consistent, differences between subjects were great with a wide range in normal killing. There was no apparent cellular or opsonic defect in patients with cryptococcosis.