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It has been posited that animal development evolved from pre-existing mechanisms for regulating cell differentiation in the single celled and colonial ancestors of animals. Although the progenitors of animals cannot be studied directly, insights into their cell biology may be gleaned from comparisons between animals and their closest living relatives, the choanoflagellates. We report here on the life history, cell differentiation and intercellular interactions in the colony-forming choanoflagellate Salpingoeca rosetta. In response to diverse environmental cues, S. rosetta differentiates into at least five distinct cell types, including three solitary cell types (slow swimmers, fast swimmers, and thecate cells) and two colonial forms (rosettes and chains). Electron microscopy reveals that cells within colonies are held together by a combination of fine intercellular bridges, a shared extracellular matrix, and filopodia. In addition, we have discovered that the carbohydrate-binding protein wheat germ agglutinin specifically stains colonies and the slow swimmers from which they form, showing that molecular differentiation precedes multicellular development. Together, these results help establish S. rosetta as a model system for studying simple multicellularity in choanoflagellates and provide an experimental framework for investigating the origin of animal multicellularity and development.