Structure and development of included phloem was investigated in the stems of Calycopteris floribunda Lamk., of the Combretaceae. After the definite period of cambial activity, cells in the middle of the cambial zone began to differentiate into thin walled cambial derivatives which separated the cambium into outer and inner cambial segment at certain places. Rest of the cambium along with separated outer segment remained functionally active while inner segment became temporarily nonfunctional. Original circular outline of the cambial cylinder was restored by joining of outer segment with existing one whereas inner cambial segment got embedded resulting in production of an islands of included phloem in the secondary xylem. This process was repeated several times resulting in a number of phloem islands surrounded within thick walled secondary xylem. Differentiation of phloem elements was initiated only after the formation of thick walled xylem derivatives from the outer cambial segment. The segments of the cambium producing the phloem island remained active for fairly long time. Sieve tube elements of the phloem islands situated deep inside the older stem became non-functional and underwent obliteration after heavy accumulation of callose. Secondary xylem was diffuse porous with indistinct growth rings and composed of vessels (both wider and fibriform vessels), nucleated xylem fibers, axial and ray parenchyma. Perforated ray cells were also encountered frequently in all the samples studied. Structure and development of included phloem is described in detail and possible significance of nucleated fibers and perforated ray cells is discussed.