Most legumes can form a unique type of lateral organ on their roots: root nodules. These structures host symbiotic nitrogen-fixing bacteria called rhizobia. Several different types of nodules can be found in nature, but the two best-studied types are called indeterminate and determinate nodules. These two types differ with respect to the presence or absence of a persistent nodule meristem, which consistently correlates with the cortical cell layers giving rise to the nodule primordia. Similar to other plant developmental processes, auxin signalling overlaps with the site of organ initiation and meristem activity. Here, we review how auxin contributes to early nodule development. We focus on changes in auxin transport, signalling, and metabolism during nodule initiation, describing both experimental evidence and computer modelling. We discuss how indeterminate and determinate nodules may differ in their mechanisms for generating localized auxin response maxima and highlight outstanding questions for future research.