In response to harsh environmental conditions, C. elegans larvae undergo dauer arrest at the second molt. The past decade has yielded many insights into the signaling pathways and the molecular mechanisms that govern this developmental transition. Dauer pheromone, the major physiologic signal promoting dauer arrest, has been purified, identified, and synthesized. The molecular identities of the vast majority of dauer regulatory genes isolated in initial genetic screens are now known. Physiologic ligands for DAF-12, a nuclear receptor that is the final common target of dauer regulatory pathways, have been identified. The discovery of the Hid (high temperature induction of dauer) phenotype and the results of enhancer screens have greatly expanded the repertoire of dauer regulatory genes. Genomic analysis of dauer arrest has highlighted the role of pathway crosstalk in dauer regulation. Nonetheless, critical questions remain about the mechanistic underpinnings of dauer arrest.