Cyclic di-GMP [bis-(3Ј-5Ј)-cyclic di-GMP] (Fig. 1) is a novel second messenger in bacteria that was first described as an allosteric activator of cellulose synthase in Gluconacetobacter xylinus (49). It is now established that this nucleotide is almost ubiquitous in bacteria, where it regulates a range of functions including developmental transitions, aggregative behavior, adhesion, biofilm formation, and the virulence of animal and plant pathogens (for reviews, see references 15, 18, 30, 31, 47, and 48). The level of cyclic di-GMP in bacterial cells is influenced by both synthesis and degradation. The GGDEF protein domain synthesizes cyclic di-GMP, whereas the EAL and HD-GYP domains are involved in cyclic di-GMP hydrolysis (43,50,51,53,54,58). Bacterial genomes encode a number of proteins with GGDEF, EAL, and HD-GYP domains; e.g., in Pseudomonas aeruginosa, there are 40 such proteins. The majority of these proteins contain additional signal input domains. These signaling systems are presumed to use cyclic di-GMP as a second messenger to link the sensing of specific environmental cues to appropriate alterations in bacterial physiology and/or gene expression. Some details about the operation and organization of cyclic di-GMP signaling systems are emerging. Nevertheless, many questions remain to be answered, and new puzzles have arisen as a result of experimental investigations. Here, we review the recent advances and highlight the considerable gaps in our understanding of cyclic di-GMP signaling. In particular, we discuss (i) the protein domains involved in cyclic di-GMP turnover, highlighting HD-GYP, recently described as a novel cyclic di-GMP phosphodiesterase; (ii) signals that are transduced through cyclic di-GMP signaling; (iii) the role of cyclic di-GMP signaling in bacterial virulence; (iv) recent findings addressing the organization of, and interplay between, different cyclic di-GMP signaling systems; (v) the concept of localized pools of cyclic di-GMP within the cell; and (vi) the mechanisms by which cyclic di-GMP exerts its effects on diverse cellular functions.