The prospects of developing strains of legume nodule bacteria that provide higher productivity of leguminous plants are described. The generic, biochemical, physiological, regulatory, and economic constraints that govern the ability of private and public efforts to construct better inoculants for legume nodulation are discussed. Success in constructing better inoculants requires a two-pronged approach. First, strains need to be improved in order to compete successfully with indigenous strains for root nodulation of legumes. Several loci have been identified to date that affect competitiveness for strain nodule occupancy. Usually mutations in these loci affect the ability of a strain to form nodules rapidly and efficiently. Other loci, such as those that confer antibiotic production, can be added to strains to enhance nodulation competitiveness when co-inoculated with antibiotic-sensitive strains. Second, the inoculum strains must be improved with respect to symbiotic nitrogen fixation. Efforts to enhance the symbiotic productivity of legume nodule bacteria either by mutation or genetic engineering are also described. The best characterized example of these is the hydrogenase system. Due to nitrogenase-dependent catalysis of proton reduction, diazotrophs evolve large amounts of H,. An approach to maximize the efficiency of symbiotic N, fixation, and therefore of legume productivity, is to construct strains of Rhizobium with the ability to oxidize this otherwise wasted H,. The electrons produced by H, oxidation are funneled through energy-conserving electron transport chains. Our knowledge of the genetics and biochemistry of H, oxidation in Bradyrhizobium japonicum and Rhizobium leguminosarum has developed rapidly in recent years. At least 20 genes are needed for these bacteria to manufacture and efficiently express a nickel-containing H,-uptake hydrogenase. These genes include those encoding regulatory elements, posttranslational processing enzymes, nickel-sensing and nickel-metabolism proteins, and electron transport components for integrating the electrons from H, oxidation into the respiratory chain. Some of the components for oxidizing H, in the symbiotic N, fixing bacteria are distinct from the analogous components in (nonsymbiotic) H, oxidizing bacteria.