Upon nutritional limitation, the bacterium Bacillus subtilis has the capability to enter the irreversible process of sporulation. This developmental process is bistable, and only a subpopulation of cells actually differentiates into endospores. Why a cell decides to sporulate or not to do so is poorly understood. Here, through the use of time-lapse microscopy, we follow the growth, division, and differentiation of individual cells to identify elements of cell history and ancestry that could affect this decision process. These analyses show that during microcolony development, B. subtilis uses a bet-hedging strategy whereby some cells sporulate while others use alternative metabolites to continue growth, providing the latter subpopulation with a reproductive advantage. We demonstrate that B. subtilis is subject to aging. Nevertheless, the age of the cell plays no role in the decision of its fate. However, the physiological state of the cell's ancestor (more than two generations removed) does affect the outcome of cellular differentiation. We show that this epigenetic inheritance is based on positive feedback within the sporulation phosphorelay. The extended intergenerational "memory" caused by this autostimulatory network may be important for the development of multicellular structures such as fruiting bodies and biofilms.