Exudates have been observed on a number of fungi as liquid droplets adhering to the hyphae, and detailed investigation with Fusarium culmorum shows a definite pattern to the distribution of the droplets in relation to colony morphology. This suggests that the process of exudation is of physiological significance and specific properties of the droplets, absorption, and reexudation, their apparent role in spore formation, and their biochemical contents support this premise. Droplets appear to be closely associated with colony aging and their properties change as this process occurs. Initially they are transparent and water-like but become granular and opaque, and in some instances packed with spores as the colony develops. The sequence of droplet development and a mechanism for the release of these droplets and their function in normal physiological functioning of the organism is discussed.