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The legume plant Medicago truncatula establishes a symbiosis with the nitrogen-fixing bacterium Sinorhizobium meliloti which takes place in root nodules. The formation of nodules employs a complex developmental program involving organogenesis, specific cellular differentiation of the host cells and the endosymbiotic bacteria, called bacteroids, as well as the specific activation of a large number of plant genes. By using a collection of plant and bacterial mutants inducing non-functional, Fix− nodules, we studied the differentiation processes of the symbiotic partners together with the nodule transcriptome, with the aim of unravelling links between cell differentiation and transcriptome activation. Two waves of transcriptional reprogramming involving the repression and the massive induction of hundreds of genes were observed during wild-type nodule formation. The dominant features of this “nodule-specific transcriptome” were the repression of plant defense-related genes, the transient activation of cell cycle and protein synthesis genes at the early stage of nodule development and the activation of the secretory pathway along with a large number of transmembrane and secretory proteins or peptides throughout organogenesis. The fifteen plant and bacterial mutants that were analyzed fell into four major categories. Members of the first category of mutants formed non-functional nodules although they had differentiated nodule cells and bacteroids. This group passed the two transcriptome switch-points similarly to the wild type. The second category, which formed nodules in which the plant cells were differentiated and infected but the bacteroids did not differentiate, passed the first transcriptome switch but not the second one. Nodules in the third category contained infection threads but were devoid of differentiated symbiotic cells and displayed a root-like transcriptome. Nodules in the fourth category were free of bacteria, devoid of differentiated symbiotic cells and also displayed a root-like transcriptome. A correlation thus exists between the differentiation of symbiotic nodule cells and the first wave of nodule specific gene activation and between differentiation of rhizobia to bacteroids and the second transcriptome wave in nodules. The differentiation of symbiotic cells and of bacteroids may therefore constitute signals for the execution of these transcriptome-switches.