The operation of the C4 pathway requires the cooperation of two distinct tissue types-mesophyll and bundle sheath-which differ in enzyme complement and structural features. Both tissues are organized in relation to leaf vasculature during development. The characteristic vein spacing, tissue-volume relationships, and timing of developmental events indicate that the formation of leaf vein procambia is crucial in determining the overall pattern of bundle sheath and mesophyll differentiation. Analysis of structural changes during tissue differentiation and of the pattern of C4 gene expression show that these events are coordinated and that the C4 pathway is not fully functional until Kranz anatomy is developed. Detailed studies using developmental mutants, heteroblastic variation in leaf anatomy, and light-shift experiments indicate that the C3 pattern of photosynthetic gene expression is the "default" scheme and that the C4 pattern of gene expression develops secondarily in response to positional signals and illumination. Although many fundamental questions remain, the integration of the anatomical and molecular approaches should permit progress toward understanding the influences that guide differentiation of bundle sheath and mesophyll tissues in C4 species.