>Mmm... yes, the form should be visible, but I'm thinking of focus. If you show the form, it will gain focus (unless you hide it in form's MouseLeave), but then it'd be a matter of navigation - where would the mouse pointer be once it leaves the form? It could create erratic navigation. Maybe if there was a read-only textbox somewhere on top, which would expand, just like it happens in Excel when you click on a cell which has several rows of text.

No, I meant the form should be invisible until You need the expanded cell. The form should never appear as form. If You do not use an activeX-grid it could be just an editbox on the form with the grid. Hide it somewhere and when needed position it where it belongs. I think most of the "faboulos" things trick us that way. have a look at windows-explorer, select a folder and press F2 (-> rename). Take a close. I am sure they place a simple textbox over the selected node.

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>Another way would be to have a multiline tooltip (another Activex?), and use the form when clicked for editing.

The tooltip-thing could be realized easily with the editbox. That should be more easy than positioning it directly over the grid-cell. (-> mousemove / mouseover of the cell).

For all theese things where You have to do a lot with specific cells I have to admit, I normally do use ActiveX-Grids (VSFlexGrid, MSFlexGrid or JanusGrid)