Symbiosis between rhizobia and leguminous plants leads to the formation of N2-fixing root nodules. The interaction of rhizobia and plants shows a high degree of host specificity based on the exchange of chemical signals between the symbiotic partners. The plant signals, flavonoids exuded by the roots, activate the expression of nodulation genes, resulting in the production of the rhizobial lipochitooligosaccharide signals (Nod factors). Nod factors act as morphogens that, under conditions of nitrogen limitation, induce cells within the root cortex to divide and to develop into nodule primordia. This review focuses on how the production of Nod factors is regulated, how these signals are perceived and transduced by the plant root, and the physiological conditions and plant factors that control the early events leading to root nodule development.