3',5'-Cyclic diguanylic acid (c-di-GMP) is a naturally occurring small cyclic dinucleotide found in bacteria. There has been a recent surge of interest in the two-component signalling networks involving this molecule. This tutorial review introduces the biosynthesis of c-di-GMP, particularly the conserved domain features involved in its enzymatic synthesis and degradation, cellular functions and phenotypes regulated by c-di-GMP through c-di-GMP-binding proteins. The chemical synthesis and structural studies of c-di-GMP are also summarized. Two potential applications of c-di-GMP, i.e. bacterial biofilm formation and immunostimulation, are surveyed. Recent observations on c-di-GMP-binding riboswitches are also introduced.