Toxoplasma gondii is a protozoan parasite of mammals and birds that is an important human pathogen. Infection with this Apicomplexan parasite results in its dissemination throughout its host via the tachyzoite life-stage. After dissemination these tachyzoites differentiate into bradyzoites within cysts that remain latent. These bradyzoites can transform back into tachyzoites and in immunosupressed individuals this often results in symptomatic disease. Both tachyzoites and bradyzoites develop in tissue culture and thus this crucial differentiation event can be studied. Recent advances in the genetic manipulation of T. gondii have expanded the molecular tools that can be applied to studies on bradyzoite differentiation. Evidence is accumulating that this differentiation event is stress mediated and may share common pathways with other stress-induced differentiation events in other eukaryotic organisms. Study of the stress response and signaling pathways are areas of active research in this organism. In addition, characterization of unique bradyzoite-specific structures, such as the cyst wall, should lead to a further understanding of T. gondii biology. This review focuses on the biology and development of bradyzoites and current approaches to the study of the tachyzoite to bradyzoite differentiation process.