Stem cells in the small intestinal epithelium are known to differentiate into columnar, mucous, enteroendocrine, and Paneth cells. However, the site of initiation of stem-cell differentiation has been unknown. To approach this problem we determined the site of stem-cell differentiation along the Paneth cell line, using light microscopic morphometry and radioautography. The smallest Paneth cells containing the smallest granules were in positions 6 and 7, while the largest ones containing the largest granules were in positions 1 and 2 at the base of the crypt. Paneth cell death was less prevalent above position 3 than it was in position 1. Since cell size, granule size, and cell death are indicators of Paneth cell age, it was deduced that there is a gradient of Paneth cell age in the crypt base, with the oldest Paneth cells at the bottom, and the youngest at the top. After single injection or continuous infusion of 3H-thymidine, the first labeled Paneth cells to appear were the highest Paneth cells in their crypt column. Later, labeled Paneth cells became more prevalent in lower positions, and, eventually, appeared in position 1. The size of granules in labeled Paneth cells increased with time. It was concluded that Paneth cells originate in position 5 or above and then migrate downward. These results are consistent with a stem-cell zone hypothesis, which proposes that stem cells in positions 1-4 receive no inducement to differentiate. Only those stem cells that migrate up out of the stem-cell zone into position 5 will be induced and then begin to differentiate.