Metazoan multicellularity required the evolution of cellular processes such as cell differentiation, cell-cell adhesion and communication, along with complex gene regulatory networks and the emergence of a stem cell system. Choanocytes, the collared feeding cells in sponges, have been extensively compared to choanoflagellates, the closest sister group to metazoans due to their morphological similarities and their capacity to form multicellular structures. Recently available genomic and transcriptomic data alongside observational studies on the multicellular colonies in choanoflagellate Salpingoeca rosetta, revealed many genes shared with metazoans are upregulated only when the S. rosetta cells form colonies, while there has been little progress made on understanding the development of sponge choanocyte chambers. Choanocytes have also been suggested as playing a part in the sponge stem cell system, but again, there is limited knowledge on their general biology. To expand our understanding on this unique feeding cell that has potential stem cell capacities as well as a long-suggested homology with a closely related unicellular holozoan, I investigated molecular mechanisms underlying the development and maintenance of choanocyte chambers in the demosponge Amphimedon queenslandica.During my PhD, I have documented the formation and maintenance of choanocyte chambers in detail using cell trackers and proliferation assays, showing their dynamic nature in the sponge body as part of the stem cell system. Contrary to previous studies in sponges as well as choanoflagellates, I found that choanocyte chamber development is not always clonal, and a chamber is not always comprised of a clonal cell population. After metamorphosis, choanocytes in these chambers are also capable of dedifferentiating into archeocytes, which can subsequently differentiate into multiple cell types including new choanocyte chambers. I propose that choanocyte chambers in A. queenslandica are playing a central role in the stem cell system, increasing and maintaining the stem cell population. I have also identified genes uniquely expressed in choanocytes, as well as archeocytes (primary stem cells) and pinacocytes (epithelial cells) by manually isolating these cell types from adult sponges, which was sequenced using CEL-Seq. From this, I have obtained a reliable transcriptome for three major cell types comprising the sponge body plan. A number of analyses on the A. queenslandica choanocyte transcriptome and publicly available choanoflagellate datasets, show no strong evidence of a shared gene repertoire between choanocytes and choanoflagellates. This thesis provides a detailed documentation of choanocyte chambers and their biology in the sponge body, along with developing a number of lab-based III techniques and cell-type specific transcriptomes to be utilized for further investigation on the sponge stem cell system and the evolution of metazoan multicellularity.