Large subcutaneous fluid swellings developed on some of the sheep in two flocks infested with Psoroptes ovis during the two weeks after they had been plunge-dipped in phenol-based solutions. The swellings contained between 1 and 10 litres of exudate and affected 4 per cent of the sheep in each flock. The sheep with subcutaneous fluid swellings or exudative dermatitis had significantly lower serum albumin concentrations than the unaffected sheep (P < 0.05). In most cases secondary bacterial infections of the exudate occurred and these necessitated intensive antibiotic therapy. The severity of the skin lesions posed a serious welfare problem.