The obligate intracellular parasite Toxoplasma gondii is able to persist lifelong in its hosts by differentiating from the replicative tachyzoite stage into cyst forming latent bradyzoites. Beside the clinical relevance of stage conversion and its importance for pathogenesis and prevention of toxoplasmic encephalitis, reversible stage differentiation in T. gondii is an interesting model system of protozoan differentiation in general. In recent years a variety of molecular techniques have been developed for T. gondii, including transfection systems and the development of many selectable markers. Together with tissue culture models in which stage differentiation from tachyzoites to bradyzoites can be induced these techniques provide the tools for a molecular dissection of the differentiation pathways. Three aspects of stage conversion are highlighted in this review, including the alteration of the parasite surface, alterations in parasite metabolism and the induction of genes associated with stress response.