A technique is described which permits rapid processing of neural tissue for light microscopic analysis of sections of 1-40 microns thickness. This technique was developed as an alternative to paraffin embedding. When compared to paraffin, polyethylene glycol (PEG) offers the following advantages: 10-15 degrees C lower embedding temperatures, net tissue shrinkage of less than 5% vs approximately 50% in paraffin, and approximately one-half the embedding time. Tissue orientation during embedding and sectioning is particularly easy to control, e.g. 500 microns brain slices can be routinely flat-embedded and sectioned at 5 microns to form excellent ribbons. Since PEG is water-soluble, tissue may be dehydrated with a series of aqueous PEG solutions; the embedding matrix is easily removed by washing with a variety of aqueous buffers. These procedures allow subsequent electron microscopic analysis of material with generally well preserved ultrastructure. However, PEG is hygroscopic, thus tissue blocks become soft and difficult to section in high (greater than 90%) relative humidity. PEG was found to be compatible with intracellular staining with Lucifer yellow, horseradish peroxidase enzyme histochemistry, aqueous histofluorescence and immunocytochemical demonstration of neuronal peptides and glial fibrillary acidic protein.