The nitrogen-fixing symbiosis between Sinorhizobium meliloti and its leguminous host plant Medicago truncatula occurs in a specialized root organ called the nodule. Bacteria that are released into plant cells are surrounded by a unique plant membrane compartment termed a symbiosome. We found that in the symbiosis-defective dnf1 mutant of M. truncatula, bacteroid and symbiosome development are blocked. We identified the DNF1 gene as encoding a subunit of a signal peptidase complex that is highly expressed in nodules. By analyzing data from whole-genome expression analysis, we propose that correct symbiosome development in M. truncatula requires the orderly secretion of protein constituents through coordinated up-regulation of a nodule-specific pathway exemplified by DNF1.