Lateral root (LR) formation is an important organogenetic process that contributes to the establishment of root architecture in higher plants. In the angiosperms, LRs are initiated from the pericycle, an inner cell layer of the parent roots. Auxin is a key plant hormone that promotes LR formation, but the molecular mechanisms of auxin-mediated LR formation remain unknown. Molecular genetic studies using Arabidopsis mutants have revealed that the auxin transport system with a balance of influx and efflux is important for LR initiation and subsequent LR primordium development. In addition, normal auxin signaling mediated by two families of transcriptional regulators, Aux/IAAs and ARFs, is necessary for LR formation. This article is an update on the mechanisms of auxin-mediated LR formation in higher plants, particularly in Arabidopsis.