Bacteria, which often are subjected to fluctuations in nutrients, temperature, radiation, pH, etc., adapt to the physico-chemical environment they live in by making the appropriate changes in their gene expression patterns. During the last decades it has become increasingly clear that bacteria, in addition, have a "social life", and that changes in gene expression can also be elicited by the presence of other bacteria. Traditionally bacteria have been viewed as solitary organisms that in general do not interact with other bacteria in a coordinated manner. Recent advances in the field of bacterial cell-to-cell communication has proved this to be a misconception, and mounting evidence now show that bacterial group behaviour is ubiquitous in nature. Competence for natural genetic transformation in Streptococcus pneumoniae, which has been studied for more than seventy years, has become a paradigm for intercellular communication and cell density dependent regulation of gene expression in Gram-positive bacteria. There has been rapid progress recently in elucidating the molecular mechanisms behind regulation of natural competence in S. pneumoniae. In this review, we describe the current status of our knowledge of natural competence in this bacterium, with particular emphasis on the early phase of competence induction.