1. A specifically reacting substance of bacterial origin is present in the cell-free fluids of young cultures of pneumococcus. This substance is present when the organisms are growing at their maximum rate and undergoing little or no cell death, and consequently its. presence is not dependent upon cell disintegration but represents the extrusion of bacterial substance by the living organism. 2. The blood and urine of rabbits experimentally infected with pneumococcus contain a similar specific soluble substance during the early hours of the infectious process. 3. Human beings suffering from lobar pneumonia have in their blood and more frequently in their urine a specific soluble substance of pneumococcus origin. The amount of this substance present in the urine varies in different individuals and the presence of a large amount is of unfavorable prognostic import. This specific precipitin reaction in the urine is of diagnostic value. 4. Rabbits injected with soluble pneumococcus material continue to excrete this substance for a considerable period of time. 5. The specifically soluble substance obtained from bacterial cultures and from the urine during infection is not destroyed by boiling, by precipitation with alcohol, acetone, or ether, or by trypsin digestion. 6. Studies are in progress at this time on the degree of toxicity and on the antigenic properties of the substance.