An experimental investigation was made of the sedimentation rate of low-charged monodisperse silica and polystyrene latex particle dispersions as a function of the particle volume fraction. It was found that the normalized sedimentation velocity U/U0, corrected for the effect of the two-body hydrodynamic interaction, increases with the particle volume fraction, which indicates that the degree of particle aggregation inside the dispersions increases with the particle volume fraction. This phenomenon results from attractive many-body hydrodynamic interactions between colloidal particles. It is reported for the first time that the many-body hydrodynamic interaction becomes important at the particle concentration of 6.5 vol% in monodisperse dispersions, and the many-body thermodynamic interaction is negligible at a low particle concentration, i.e., less than 15 vol%. The effect of many-body hydrodynamic interaction on the particle microstructure was also experimentally examined by using a nondestructive Kossel diffraction technique based on the principle of back-light scattering. It was found that the particle packing structure inside the dispersion initially becomes more ordered with the increase of the particle volume fraction. However, there is less increase in the particle ordering structure after 6 vol%. Furthermore, after the particle concentration reaches 10 vol%, the particle packing structure decreases to a value lower than that of 6 vol% due to the increased particle aggregation, as found in the sedimentation experiments. Predictions of a statistical thermodynamic model were compared with the experimental data on structure factors. It is found that particle dimerization occurs around 10 vol%, which agrees with the sedimentation results. Copyright 1998 Academic Press. Copyright 1998Academic Press