Structural evolution of the National Institutes of Health (NIH) is studied with organizational theory. NIH's transition from a functional to a market divisional structure as the agency's client biomedical research community underwent segmentation is described using as case examples the formation of two institutes. Strategies followed by professional groups seeking to influence an executive agency are illustrated. How a structure focused on servicing particularmedical constituencies may compromise the study section review of research grant applications on which NIH credibility rests is examined. NIH response to the more dynamic recent environment (AIDS, molecular biology) by recourse to matrix form is considered. Prospects for survival of the agency's unique administrative synthesis are evaluated.