Developmental processes in multicellular animals depend on an array of signal transduction pathways. Studies of model organisms have identified a number of such pathways and dissected them in detail. However, these model organisms are all bilaterians. Investigations of the roles of signal transduction pathways in the early-diverging metazoan Hydra have revealed that a number of the well-known developmental signaling pathways were already in place in the last common ancestor of Hydra and bilaterians. In addition to these shared pathways, it appears that developmental processes in Hydra make use of pathways involving a variety of peptides. Such pathways have not yet been identified as developmental regulators in more recently diverged animals. In this review I will summarize work to date on developmental signaling pathways in Hydra and discuss the future directions in which such work will need to proceed to realize the potential that lies in this simple animal.