Final answer:
Cellular differentiation is the process by which unspecialized cells like stem cells become specialized into various cell types through gene expression regulated by transcription factors.
Step-by-step explanation:
Cellular differentiation is the biological process where unspecialized cells, such as stem cells, become specialized into one of the many different types of cells found in the body, such as neurons, muscle cells, or epithelial cells. This process is crucial for the development of a complex organism, which starts as a single fertilized egg and must produce a vast array of specialized cells. The differentiation process is governed by the expression of specific genes. Though all somatic cells hold the same genetic material, only a subset of genes are turned 'on' in any given cell type. The regulation of gene expression is largely managed by substances called transcription factors, which bind to DNA and activate or inhibit the transcription of genes.
These transcription factors ensure that a cell will develop certain characteristics necessary for its function in the body. As part of differentiation, cells undergo changes in size, shape, and metabolic activity to carry out distinct functions. The fate of cells to become certain cell types is regulated by signaling cascades and the specific sets of genes they express, which in turn is often influenced by the cells' embryonic environment.