Legumes form symbioses with rhizobia, which initiate the development of a new plant organ, the nodule. Flavonoids have long been hypothesized to regulate nodule development through their action as auxin transport inhibitors, but genetic proof has been missing. To test this hypothesis, we used RNA interference to silence chalcone synthase (CHS), the enzyme that catalyzes the first committed step of the flavonoid pathway, in Medicago truncatula. Agrobacterium rhizogenes transformation was used to create hairy roots that showed strongly reduced CHS transcript levels and reduced levels of flavonoids in silenced roots. Flavonoid-deficient roots were unable to initiate nodules, even though normal root hair curling was observed. Nodule formation and flavonoid accumulation could be rescued by supplementation of plants with the precursor flavonoids naringenin and liquiritigenin. The flavonoid-deficient roots showed increased auxin transport compared with control roots. Inoculation with rhizobia reduced auxin transport in control roots after 24 h, similar to the action of the auxin transport inhibitor N-(1-naphthyl)phthalamic acid (NPA). Rhizobia were unable to reduce auxin transport in flavonoid-deficient roots, even though NPA inhibited auxin transport. Our results present genetic evidence that root flavonoids are necessary for nodule initiation in M. truncatula and suggest that they act as auxin transport regulators.