In this paper we study an effective model for the normal state of iron-based superconductors. It has separate, but interacting itinerant and localized degrees of freedom, originating from the dxz and dyz, and from dxy iron orbitals respectively. At low temperatures, below a mean-field phase transition, these different states condense together in an excitonic order parameter. We show that at even lower temperature, after another phase transition, this ordered state can spontaneously break the C4 lattice symmetry and become nematic. We propose this mechanism as an explanation of the tendency towards nematicity observed in several iron-based compounds.Introduction. The discovery of high-temperature superconductivity in iron-based materials 1-3 is one of the most exciting recent developments in physics. It is almost certain that the origin of superconductivity is unconventional (i.e. driven by electron-electron interactions), and is very likely that the order parameter is unconventional as well 4,5 . The normal state properties of these materials, in contrast, at first seemed rather unremarkablea bad metal behavior at high temperatures, which can be followed by structural transition and antiferromagnetic phase at low temperatures. This simple picture was considerably complicated by the growing evidence of nematic fluctuations 6-8 or even long-range order 9 present in some compounds at temperatures well above the antiferromagnetic and structural transitions. Furthermore, this nematicity seems to be of purely electronic (rather than structural) origin 10 . Understanding this state and its connection to the other phases is an important milestone in the study of these materials.