As they collect in the mound, cells begin the transcription of cell type-specific genes, develop adhesion mechanisms, and secrete an acellular covering called the sheath. The loose mound goes on to form a compact hemispherical aggregate and prepares the anterior-posterior pattern of the future slug. The mound has been called the crucible of cellular differentiation and morphogenesis. In earlier days of Dictyostelium research, it was difficult to detect the complex gene induction events and cellular movements that occur within the mound, but as markers of cell-type differentiation have improved, the nature of the differentiation events has begun to unfold. Great efforts in microscopy, notably by the laboratories of Weijer, Siegert, McNally, and Soll, have detected elaborate coordinated movements of cells, not just during aggregation, but within the confines of the aggregate. In this chapter we will examine some of the early events that occur after the amoebae aggregate – how they secrete a covering and how they induce new genes in the loose aggregate. The aggregate is where most prestalk- and prespore-specific genes are first transcribed. This subject encompasses a large and complex literature, and an attempt will be made to put this in context. Following an examination of how the pattern of prestalk and prespore cells forms, the cellular adhesion mechanisms that Dictyostelium employs to hold cells together will be analyzed.