Plasma cells are the terminally differentiated effector cells of the B lymphocyte lineage. Recently, studies using genetically altered mice and analyses of global gene expression programs have significantly expanded our understanding of the molecular mechanisms regulating plasmacytic differentiation. Specific molecular components of a multistep cascade of transcriptional regulators have been identified. Furthermore, two transcriptional regulators, X box binding protein-1 (XBP-1) and B lymphocyte induced maturation protein-1 (Blimp-1), have been shown to be necessary for plasmacytic differentiation. In addition to providing a mechanistic basis for the induction of genes necessary for immunoglobulin secretion, cessation of cell cycle and other phenotypic changes characteristic of terminally differentiated plasma cells, these studies have led to the important concept that plasmacytic differentiation involves repression of regulators, such as Bcl-6 and Pax5, that are necessary to maintain the earlier developmental phenotype of activated, germinal center B cells. This review describes our current understanding of the transcriptional cascades regulating terminal differentiation of B cells.