Invertebrate animal models are experimentally tractable and have immunity and disease symptoms that mirror those of vertebrates. Therefore they are of particular utility in understanding fundamental aspects of pathogenesis. Indeed, artificial models using human pathogens and invertebrate hosts have revealed conserved and novel molecular mechanisms of bacterial infection and host immune responses. Additional insights may be gained from investigating interactions between invertebrates and pathogens they encounter in their natural environments. For example, enteric bacteria in the genera Photorhabdus and Xenorhabdus are pathogens of insects that also mutualistically associate with nematodes in the genera Heterorhabditis and Steinernema respectively. These bacteria serve as models to understand naturally occurring symbiotic associations that result in disease in or benefit for animals. Xenorhabdus nematophila is the best-studied species of its genus with regard to the molecular mechanisms of its symbiotic associations. In this review, we summarize recent advances in understanding X. nematophila-host interactions. We emphasize regulatory cascades involved in coordinating transitions between various stages of the X. nematophila life cycle: infection, reproduction and transmission.