The mineralogical and chemical characteristics of dark matrix and fine-grained rims in the unequilibrated CO3 chondrite ALHA773O7 have been investigated in detail by scanning electron microscopy, electron microprobe analysis, and transmission electron microscopy. Matrix and fine-grained rims on chondrules and other objects are compositionally homogeneous on the scale of 10 mum, and there are no compositional differences between matrix and rims. Mineralogically, both the matrix and rims are extremely diverse and consist of a highly unequilibrated assemblage of Si- and Fe-rich amorphous material, olivine, pyroxene, Fe,Ni metal, magnetite, pentlandite, pyrrhotite, anhydrite, and mixed layer phyllosilicate phases. Several distinct components can be recognized within the matrix and rims based on their textural and compositional characteristics, which appear to represent basic fine-grained units of nebular dust. The microstructures of these different components show that they have experienced significantly different thermal histories. Unlike the ordinary chondrites, an origin for any significant component of the matrix or rims in ALHA77307 from chondrules is improbable, based on compositional and microstructural evidence. The matrix and rim components in ALHA77307 formed by disequilibrium condensation processes as fine-grained amorphous dust that is represented by the abundant amorphous component in the matrix. Such condensation could have occurred under a variety of conditions, at different times and locations within the solar nebula, or possibly earlier in a circumstellar environment. Subsequent thermal processing of this primitive condensate material, in a variety of environments in the nebula, resulted in partial or complete recrystallization of the fine-grained dust. The intimate association of fine-grained components with disparate compositions and thermal histories shows that mixing of fine-grained dust within the nebula must have been extremely thorough.