Autozooids of the cheilostome bryozoan Aquiloniella scabra contain rod-like bacteria in the funicular bodies – the complex swellings of the funicular strands. Each funicular body contains symbionts in the central cavity surrounded by a large, synthetically active internal “sheath-cell” (bacteriocyte) and a group of the flat external cells. The tightly interdigitating lobes of these cells form a capsule well-isolated from the body cavity. Slit-like spaces between bacteria are filled with electron-dense matrix and cytoplasmic processes of various sizes and shapes (often branching) produced by the “sheath-cell”. The cell ultrastructure and complex construction of the funicular bodies as well as multiplication of the bacteria in them suggest metabolic exchange between host and symbiont, involving the nourishment of bacteria. We suggest that the bacteria, in turn, influence the bryozoan mesothelial tissue to form the funicular bodies as capsules for bacterial incubation. We present ultrastructural data, discuss possible variants in the development of the funicular bodies in Bryozoa, and propose the possible role of bacteria in the life of their bryozoan host.