Using transmission electron microscopy the development of photothermographic materials has been investigated from a microstructural point of view. The early stages of development were examined by quenching the partially processed materials. Within a few seconds after the beginning of thermal processing, small silver filaments nucleate at the corners of AgBr grains and grow towards the matrix. Each filament is a single crystal of fcc silver, however there is no clear orientation relationship with the AgBr mother lattice. In contradiction to the widely adopted point of view, the interfaces between silver bromide and silver behenate crystals do not play a direct role in the development process, since the nucleation and growth of silver filaments occurs even in the absence of such interfaces. The filament growth was also observed by heating inside the microscope column under the electron beam, although in this case the growth mechanism and the source of Ag ions were different from those for the development in real conditions. At the second stage, silver initiates the reduction of silver ions in the matrix around AgBr grains. The reduced silver is deposited as a coagulate of small metallic particles forming large and dense broccoli-type silver conglomerates.