The association between the bacterium Xenorhabdus nematophila and the nematode Steinernema carpocapsae is emerging as a model system to understand mutually beneficial symbioses. X. nematophila, but not other Xenorhabdus species, colonize a discrete region of a specific developmental stage of S. carpocapsae nematodes. Recent progress has led to the identification of bacterial genes necessary for colonization. Furthermore, new details have been elucidated regarding the morphology and physiology of the colonization site and the bacteria within it. A deeper understanding of the molecular mechanisms underlying the association of X. nematophila will undoubtedly yield insights into fundamental processes underlying the ubiquitous association of microbes with animals.