Evidence is presented that changes in the optical properties of active iridophores in the dermis of the squid Lolliguncula brevis are the result of changes in the ultrastructure of these cells. At least two mechanisms may be involved when active cells change from non-iridescent to iridescent or change iridescent color. One is the reversible change of labile, detergent-resistant proteinaceous material within the iridophore platelets, from a contracted gel state (non-iridescent) to an expanded fluid or sol state when the cells become iridescent. The other is a change in the thickness of the platelets, with platelets becoming significantly thinner as the optical properties of the iridophores change from non-iridescent to iridescent red, and progressively thinner still as the observed iridescent colors become those of shorter wavelengths. Optical change from Rayleigh scattering (non-iridescent) to structural reflection (iridescent) may be due to the viscosity change in the platelet material, with the variations in observed iridescent colors due to changes in the dimensions of the iridophore platelets.