The formation of a diazotrophic cyanobacterial filament represents a simple example of biological development. In Anabaena, a non-random pattern of one nitrogen-fixing heterocyst separated by about 10 photosynthetic vegetative cells results from lateral inhibition elicited by the cells differentiating into heterocysts. Key to this process is the patS gene, which has been shown to produce an inhibitor of heterocyst differentiation that involves the C-terminal RGSGR pentapeptide. Complementation of a ΔpatS Anabaena mutant with different versions of PatS, including point mutations or tag fusions, showed that patS is translated into a 17-amino acid polypeptide. Alterations in the N-terminal part of PatS produced inhibition of heterocyst differentiation, thus this part of the peptide appears necessary for proper processing and self-immunity in the producing cells. Alterations in the C-terminal part of PatS led to over-differentiation, thus supporting its role in inhibition of heterocyst differentiation. A polypeptide, produced in proheterocysts, consisting of a methionine followed by the eight, but not the five, terminal amino acids of PatS recreated the full activity of the native peptide. Immunofluorescence detection showed that an RGSGR-containing peptide accumulated in the cells adjacent to the producing proheterocysts, illustrating intercellular transfer of a morphogen in the cyanobacterial filaments.