Heterocyst differentiation in filamentous cyanobacteria provides an excellent prokaryotic model for studying multicellular behaviour and pattern formation. In Anabaena sp. strain PCC 7120, for example, 5-10% of the cells along each filament are induced, when deprived of combined nitrogen, to differentiate into heterocysts. Heterocysts are specialized in the fixation of N(2) under oxic conditions and are semi-regularly spaced among vegetative cells. This developmental programme leads to spatial separation of oxygen-sensitive nitrogen fixation (by heterocysts) and oxygen-producing photosynthesis (by vegetative cells). The interdependence between these two cell types ensures filament growth under conditions of combined-nitrogen limitation. Multiple signals have recently been identified as necessary for the initiation of heterocyst differentiation, the formation of the heterocyst pattern and pattern maintenance. The Krebs cycle metabolite 2-oxoglutarate (2-OG) serves as a signal of nitrogen deprivation. Accumulation of a non-metabolizable analogue of 2-OG triggers the complex developmental process of heterocyst differentiation. Once heterocyst development has been initiated, interactions among the various components involved in heterocyst differentiation determine the developmental fate of each cell. The free calcium concentration is crucial to heterocyst differentiation. Lateral diffusion of the PatS peptide or a derivative of it from a developing cell may inhibit the differentiation of neighbouring cells. HetR, a protease showing DNA-binding activity, is crucial to heterocyst differentiation and appears to be the central processor of various early signals involved in the developmental process. How the various signalling pathways are integrated and used to control heterocyst differentiation processes is a challenging question that still remains to be elucidated.