A AuGe liquid alloy ion source was observed in situ under various operating conditions in a 1 MeV transmission electron microscope. The formation of a field-stabilized liquid cone, the change in the cone shape as a function of ion emission current, spatial shifts of the liquid cone, and microdroplet emission were investigated. Below the onset voltage the shape of the tip covered with liquid AuGe alloy is spherical. At the onset voltage a Taylor cone is formed. At ion emission currents I-e larger than 4 mu A a jetlike protrusion at the Taylor cone vertex can definitively be seen. At lower emission currents possible jet formation cannot be identified unambiguously. The cone half-angle a decreases linearly with the ion emission current, while the jet length and the jet diameter increase linearly with I-e. Emission of microdroplets was observed from the surroundings of the Taylor cone region. Microdroplets with a radius between 80 and 2300 nm are emitted in time intervals of about 0.1 s and more.