The structure of rhizomorphs of Armillaria luteobubalina grown on agar and in liquid culture has been compared using light and scanning electron microscopy. They differed in the extent of their peripheral hyphae, amount of surface mucilage, degree of pigmentation, growth rate, and structure of their inner cortex. Otherwise their internal structure was similar. At maturity four distinct radial zones could be recognised: (1) surface layer of peripheral hyphae from which hyphae extended radially; (2) outer cortex; (3) inner cortex; and (4) central medulla. The A. luteobubalina rhizomorph can be interpreted as a relatively strong ‘tube' of hyphae with a variously developed surface, surrounding a medulla of gas space containing wefts of fluffy fine hyphae. Submerged rhizomorphs grew at much faster rates than aerial rhizomorphs. The central gas-filled cavity most likely facilitates diffusion of oxygen along the rhizomorph, allowing growth through anaerobic environments. There was no evidence for specialised translocatory hyphae such as vessel hyphae. A zone of swollen hyphae interspersed with narrow hyphae developed at the interface between the inner cortex and medulla in submerged rhizomorphs. These were alive and septate and gave the tissue a resemblance to vascular plant aerenchyma, rather than specialised translocatory tissue. Peripheral hyphae took up and hydrolysed the fluorescent probe carboxy-DFFDA (Oregon Green) and accumulated the hydrolysis product in the vacuoles, suggesting that they are permeable. In contrast penetration of the cortex by the probe was limited. These data support the view that in moist conditions these rhizomorphs can function as organs of absorption and play a role in nutrient uptake.