We present the first VLBI observations of the compact source S1 in the
radio jet of NGC 1068. Roughly 1 pc in length and 0.2 pc wide, S1 res
olves into clumps aligned perpendicular to the local radio jet axis. T
he radio continuum emission arises from a hot (T-e similar to 10(6) K)
, dense (n(e) similar to 10(6) cm(-3)) plasma, and the source of the r
adio emission is either thermal free-free emission or Thomson-reflecte
d synchrotron emission. The clouds comprising S1 are opaque to soft X-
radiation, and we therefore propose that S1 is the inner, ionized regi
on, or 'hot zone,' of the obscuring medium surrounding the active nucl
eus. The covering fraction of the hot zone is small, C-f less than or
equal to 10%. Since the covering fraction of the dusty, obscuring medi
um is probably much larger, the obscuring disk must either flare or wa
rp outside of the hot zone. That the radio jet and hot zone axes are p
erpendicular also suggests that the hot zone may be considered to trac
e the outermost extent of the accretion disk.