There are several instances of cellular differentiation in prokaryotes, including the formation of spores in Bacillus, the fruiting bodies of Myxococcus, and the stalked cells of Caulobacter. The vegetative cells of particular filamentous cyanobacteria can differentiate into three different cell types: N(2)-fixing heterocysts, spore-like akinetes, and motile hormogonia. Heterocysts are crucial for the ability of these photosynthetic bacteria to fix N(2) because they keep the oxygen-labile nitrogenase away from the photosynthetically produced O(2). Heterocysts are morphologically and functionally distinct from vegetative cells in the filament. Their differentiation relies on sophisticated intercellular communication and is tightly regulated. Analyzed by classical mutagenesis for decades, heterocyst differentiation is now being approached by large-scale methodologies, leading to the identification of new elements that might be important in the process.