The neem plant is known to accumulate about 25 diterpenoids and 100 different triterpenoids, including the biologically most active azadirachtins. Azadirachtins possess a wide spectrum of therapeutic and powerful pesticidal properties. The terpenoids are synthesized and accumulate within idioblasts known as secretory cells. The cotyledons of neem are the richest source of terpenoids, up to 3% of seed weight. Cotyledons also store considerable quantity of neem oil. The secretory cells differentiate about 40 days after pollination in cotyledons that are 4-6 mm long. Development of a secretory cell commences with cell enlargement, increase in the size the nucleus and vacuole. The cell walls of secretory cells are strengthened by the addition of wall material by the adjacent cells. Small vesicles containing terpenoids accumulate in the cytoplasm. The terpenoid vesicles appear to originate by the enlargement of endoplasmic reticulum (ER). A string of terpenoid vesicles interconnected by narrow regions gives a beaded appearance. The mature vesicles do not possess a boundary membrane. Each vesicle consists of many small droplets, in the range of 50-100 nm in diameter. The vesicles grow by the addition of terpenoids synthesized by ER in the vicinity of the terpenoid vesicles. As the vesicles develop the vacuole fragments into two or more bodies. The cytoplasm contains numerous ribosomes and ER. Plastids, mitochondria and microbodies, and a few dictyosomes also occur. Lipid bodies accumulate at later stages of development. The plastids are likely to provide the isoprenoids that may be further elaborated by other organelles. In addition, the vacuoles, cytoplasm and ER may all provide the enzymes and compartments necessary for the synthesis of a large variety of terpenoids. In vitro extraction of terpenoids is possible only if the cultured neem tissues are induced to differentiate secretory cells.

Key words: Azadirachta indica, Neem, secretory cells, terpenoids, ultrastructure