The interaction of the tropical legume Sesbania rostrata with the Azorhizobium caulinodans bacterium results in the formation of nodules not only on roots but also on stems at adventitious root bases. Transcripts that are expressed during stem nodule initiation were identified with the suppression subtractive hybridization technique. Out of an original collection of 102, 26 genes were confirmed to be differentially expressed in macroarray hybridizations. Most of the genes belong to the medium-abundant expression group, but more information on some low-abundant differentially expressed genes was obtained by in situ hybridization. Two genes, SrSAMS and SrERF1 that are clearly enhanced during nodulation could be involved in the production and perception of ethylene, which is necessary for nodulation of S. rostrata under aquatic conditions.