Multicellular organisms probably originated as groups of cells formed in several ways, including cell proliferation from a group of founder cells and aggregation. Cooperation among cells benefits the group, but may be costly (altruistic) or beneficial (synergistic) to individual cooperating cells. In this paper, we study conflict mediation, the process by which genetic modifiers evolve that enhance cooperation by altering the parameters of development or rules of formation of cell groups. We are particularly interested in the conditions under which these modifiers lead to a new higher-level unit of selection with increased cooperation among group members and heritable variation in fitness at the group level. By sculpting the fitness variation and opportunity for selection at the two levels, conflict modifiers create new functions at the organism level. An organism is more than a group of cooperating cells related by common descent; organisms require adaptations that regulate conflict within. Otherwise their continued evolution is frustrated by the creation of within-organism variation and conflict between levels of selection. The evolution of conflict modifiers is a necessary prerequisite to the emergence of individuality and the continued well being of the organism. Conflict leads — through the evolution of adaptations that reduce it — to greater individuality and harmony for the organism.