Polyurethanes are among the few types of organic materials which are suitable for use in coating form as linings for large, steel fuel-storage tanks. Such linings have been in service in shore tanks of the Navy for five years, and have given satisfactory performance. However, in the bottom areas, where the linings are exposed to water, blistering has occurred. The blisters are tough, liquid-filled hemispheres, which generally develop within the layers of the coating. Upon the basis of numerous immersion experiments, it is suggested that there are sites within polyurethane coatings which are particularly subject to blister initiation. Evidence has been collected to indicate that these sites may be minute, carbon dioxide bubbles formed by side reactions of the coating components. Several means of reducing the numbers and sizes of blisters have been found, and work is in progress to prevent the blister formation completely.