The bacterium, Photorhabdus luminescens, is an insect pathogen that also maintains a mutualistic interaction with nematodes from the family Heterorhabditis. Photorhabdus luminescens is carried in the gut of the infective juvenile (IJ), a nematode stage that infects soft-cuticled insect larvae in the soil. Photorhabdus luminescens is released into the insect blood to convert the insect into a biomass that is able to support nematode growth and development. Nematode reproduction continues for 2-3 generations before the nematodes enter an alternative developmental pathway leading to a new generation of IJs that are efficiently colonized by P.luminescens in a process called transmission. Transmission begins with the adherence of P.luminescens to the rectal gland cells (RGC) located in the gut of the hermaphrodite. The bacteria enter, and replicate within, the RGC resulting in vacuolization, and ultimately lysis, of the RGC. In this way P.luminescens are released throughout the body cavity of the hermaphrodite to encounter, and colonize, the developing IJs. In this study we show that the LysR-type regulator, HdfR, is required for normal transmission in P.luminescens TTO1. Transcriptome analysis revealed that HdfR regulates the expression of 124 genes, including genes involved in arginine metabolism, hydroxyphenylacetate catabolism and pigment production. Using fluorescence microscopy we show that the ΔhdfR mutant is able to attach to, and grow within, the hermaphrodite as well as wild-type bacteria but subsequent steps in transmission are delayed. Therefore, HdfR plays an important role in coordinating the interaction between P.luminescens and its nematode partner during transmission.