This chapter discusses various aspects of the blood and the mononuclear phagocyte system. Blood is regarded as a modified connective tissue because the cellular elements in it are separated by a considerable amount of intercellular substance. Differences between erythrocytes and leucocytes, facts about neutrophils, basophils, and eosinophils, and formation and circulation of lymphocytes, are some topics discussed in detail. T-lymphocytes specialize in recognizing cells that are foreign to the host body such as fungi, virus infected cells, tumor cells, or cells of another individual. The destruction of foreign cells by T-lymphocytes is responsible for the ‘rejection’ of tissues or organs grafted from one person to another. Such rejection is one of the major problems in organ transplantation. Cells of mononuclear phagocyte system include monocytes of blood, macrophage cells, microglial cells, macrophages in pleura, free macrophages, and dendritic cells. Antigens phagocytosed by macrophages are partially digested by lysosomes. Some remnants of these pass to the cell surface where they form complexes with the MHC antigens.