Direct inoculation of bluetongue virus into 125-day bovine fetuses resulted in development of hydranencephaly. The earliest lesions after virus inoculation were a severe necrotizing encephalitis, which was most prominent in the cerebrum, and an associated nonsuppurative meningitis. At birth, the brains of infected fetuses had thin-walled cerebral hemispheres, dilated lateral ventricles, and cerebral cysts. No gross lesions were observed in the brain stem or cerebellum. Two morphologically different lesions were present in the brain of a fetus sacrificed 20 days after virus inoculation. There were discrete foci of hemorrhagic cerebral necrosis that resembled infarcts and widespread microcavitations of the intermediate and subventricular zones. Changes consistent with vascular damage were present in the brains of fetuses sacrificed 12 and 20 days after virus inoculation. Calves with bluetongue virus-induced hydranencephaly would have poor viability, but they would not be expected to have any significance as virus reservoirs.