Dictyostelium is a microorganism found in soils that are known as the battle fields of chemical warfare. Genome analysis of Dictyostelium revealed that it has great potential for the production of small molecules, including secondary metabolites such as polyketides and terpenes. Polyketides are a large family of secondary metabolites which have a variety of structures. In accordance with their structural variety, polyketides have a plethora of biological activities, including antimicrobial, antifungal, and antitumor activities. Unsurprisingly, they have exceptional medical importance. Polyketides in nature work as protective compounds and /or function in pheromonal communication. Terpenes belong to another family of structurally diverse secondary metabolites which play roles in ecological interactions, including defence against predators and formation of mutually beneficial alliance with other organisms. Polyketides and terpenes work as intra-or inter-species signalling compounds, i.e. they play the role of a chemical language. However, in Dictyostelium, they work as paracrine signalling compounds which control the organism's multicellular morphogenesis. This review is primarily focused on the small molecules that regulate pattern formation in the slug stage of the organism and their biosynthetic pathways. Current in vivo understandings of polyketide DIF-1 induced cell differentiation and DIF-1-dependent/independent pathways are also discussed.