When confronted by disparate environments, microbes routinely alter their physiology to tolerate or exploit local conditions. But some circumstances require more drastic remodelling of the bacterial cell, as sporulation by the Bacillus and Streptomyces species of soil bacteria vividly illustrates. Cellular differentiation is also crucial for pathogens, the challenge for which is to colonize one host, then be transmitted to the next. Using the Gram-negative Legionella pneumophila as a model intracellular pathogen, we describe how biogenesis of the replication vacuole is determined by the developmental state of the bacterium. Subsequently, when replicating bacteria have exhausted the nutrient supply, the pathogens couple their conversion to stationary phase physiology with expression of traits that promote transmission to a new host. The cellular differentiation of L. pneumophila is co-ordinated by a regulatory circuit that integrates several elements that are broadly conserved in the microbial world. The alarmone (p)ppGpp promotes transcription directed by the alternative sigma factors RpoS, FliA and, probably, RpoN, and also post-transcriptional control mediated by a two-component regulatory system, LetA/S (GacA/S), and an mRNA-binding protein, CsrA (RsmA). By applying knowledge of microbial differentiation in combination with tools to screen the complete genomes of pathogens, experiments can be designed to identify two distinct classes of virulence traits: factors that promote replication and those dedicated to transmission.