Rhizobium meliloti can interact symbiotically with Medicago plants, thereby inducing root nodules. However, certain Medicago plants can form nodules spontaneously, in the absence of rhizobia. A differential screening was performed using spontaneous nodule versus root cDNAs from Medicago sativa ssp. varia. Transcripts of a differentially expressed clone, Msenod40, were detected in all differentiating cells of nodule primordia and spontaneous nodules, but were absent in fully differentiated cells. Msenod40 showed homology to a soybean early nodulin gene, Gmenod40, although no significant open reading frame (ORF) or coding capacity was found in the Medicago sequence. Furthermore, in the sequences of cDNAs and a genomic clone (Mtenod40) isolated from Medicago truncatula, a species containing a unique copy of this gene, no ORFs were found either. In vitro translation of purified Mtenod40 transcripts did not reveal any protein product. Evaluation of the RNA secondary structure indicated that both msenod40 and Gmenod40 transcripts showed a high degree of stability, a property shared with known non-coding RNAs. The Mtenod40 RNA was localized in the cytoplasm of cells in the nodule primordium. Infection with Agrobacterium tumefaciens strains bearing antisense constructs of Mtenod40 arrested callus growth of Medicago explants, while overexpressing Mtenod40 embryos developed into teratomas. These data suggest that the enod40 genes might have a role in plant development, acting as 'riboregulators', a novel class of untranslated RNAs associated with growth control and differentiation.