Transcription factors (TFs) are thought to regulate many aspects of nodule and symbiosis development in legumes, although few TFs have been characterized functionally. Here, we describe regulator of symbiosome differentiation (RSD) of Medicago truncatula, a member of the Cysteine-2/Histidine-2 (C2H2) family of plant TFs that is required for normal symbiosome differentiation during nodule development. RSD is expressed in a nodule-specific manner, with maximal transcript levels in the bacterial invasion zone. A tobacco (Nicotiana tabacum) retrotransposon (Tnt1) insertion rsd mutant produced nodules that were unable to fix nitrogen and that contained incompletely differentiated symbiosomes and bacteroids. RSD protein was localized to the nucleus, consistent with a role of the protein in transcriptional regulation. RSD acted as a transcriptional repressor in a heterologous yeast assay. Transcriptome analysis of an rsd mutant identified 11 genes as potential targets of RSD repression. RSD interacted physically with the promoter of one of these genes, VAMP721a, which encodes vesicle-associated membrane protein 721a. Thus, RSD may influence symbiosome development in part by repressing transcription of VAMP721a and modifying vesicle trafficking in nodule cells. This establishes RSD as a TF implicated directly in symbiosome and bacteroid differentiation and a transcriptional regulator of secretory pathway genes in plants.