The lysis-lysogeny decision of bacteriophage lambda (lambda) is a paradigm for developmental genetic networks. There are three key features, which characterize the network. First, after infection of the host bacterium, a decision between lytic or lysogenic development is made that is dependent upon environmental signals and the number of infecting phages per cell. Second, the lysogenic prophage state is very stable. Third, the prophage enters lytic development in response to DNA-damaging agents. The CI and Cro regulators define the lysogenic and lytic states, respectively, as a bistable genetic switch. Whereas CI maintains a stable lysogenic state, recent studies indicate that Cro sets the lytic course not by directly blocking CI expression but indirectly by lowering levels of CII which activates cI transcription. We discuss how a relatively simple phage like lambda employs a complex genetic network in decision-making processes, providing a challenge for theoretical modeling.