Differentiation commitment is one of the most complex mechanisms to study in biological science. One of the model systems used for understanding differentiation complexity is heterocyst development in cyanobacteria. Cyanobacteria have the capability of biological nitrogen fixation due to highly differentiated heterocyst cells. Once the nitrogen deficiency signal is perceived by the cyanobacteria, few of its vegetative cells commit toward the development of heterocyst. Heterocyst provides a microoxic environment that is essential for the nitrogenase complex to fix the atmospheric dinitrogen. The entire process of development of heterocyst can be divided into different steps, such as (a) sensing signal and differentiation induction, (b) positional (pattern) determination of heterocyst in the filament, (c) formation of extracellular thick heterocyst‐specific layers, and (d) assembly of nitrogen‐fixing machinery. Many of the key regulators that are essential for heterocyst formation in these different steps have been identified. Recently, the role of small RNA and interruption DNA elements that influence the heterocyst formation and function has also been identified. In this review article, we have outlined the current understanding of the entire molecular circuit of heterocyst development in a simplistic way. This article focuses on explaining key concepts related to heterocyst development and discusses recent discoveries in this line.