Myxobacteria are Gram-negative soil microorganisms that prey on other microorganisms. Myxobacteria have significant potential for applications in biotechnology because of their extraordinary ability to produce natural products such as secondary metabolites. Myxobacteria also stand out as model organisms for the study of cell-cell interactions and multicellular development during their complex life cycle. Cellular morphogenesis during multicellular development in myxobacteria is very similar to that in the eukaryotic soil amoebae. Recent studies have started uncovering molecular mechanisms directing the myxobacterial life cycle. We describe recent studies on signal transduction and gene expression during multicellular development in the myxobacterium Myxococcus xanthus. We provide our current model for signal transduction pathways mediated by a two-component His-Asp phosphorelay system and a Ser/Thr kinase cascade.