The symbiotic interaction between Rhizobium bacteria and legume plants leads to the induction of a new developmental program: the formation of nitrogen-fixing root nodules. Nodulation is triggered by specific bacterial signals, the Nod factors, and integrates plant developmental regulatory pathways to reactivate differentiated cortical cells. This results in the formation of a de novo meristem, corresponding to a plant stem cell niche. Recent data have shown a crucial function of the phytohormone cytokinin and its signaling pathway in nodule initiation. Activation of either cytokinin or components of the Nod factor signaling pathway leads to spontaneous induction of the nodule organogenesis program. These genetic analyses have been complemented with genomic studies of transcriptional networks activated during early nodulation. Transcriptional and posttranscriptional regulation, notably involving transcription factors and microRNAs, fine-tune the dynamic equilibrium between proliferating meristematic and differentiated nitrogen-fixing cells. The recent identification of these regulatory mechanisms has helped elucidate nodule organogenesis and the agriculturally relevant process of symbiotic nitrogen fixation and extended our understanding of how differentiated root cells acquire developmental plasticity to form a new organ.