Molecular pathways involved in dauer formation, an alternate larval stage that allows Caenorhabditis elegans to survive adverse environmental conditions during development, also modulate longevity and metabolism. The decision to proceed with reproductive development or undergo diapause depends on food abundance, population density, and temperature. In recent years, the chemical identities of pheromone signals that modulate dauer entry have been characterized. However, signals derived from bacteria, the major source of nutrients for C. elegans, remain poorly characterized. To systematically identify bacterial components that influence dauer formation and aging in C. elegans, we utilized the individual gene deletion mutants in E. coli (K12). We identified 56 diverse E. coli deletion mutants that enhance dauer formation in an insulin-like receptor mutant (daf-2) background. We describe the mechanism of action of a bacterial mutant cyaA, that is defective in the production of cyclic AMP, which extends lifespan and enhances dauer formation through the modulation of TGF-β (daf-7) signaling in C. elegans. Our results demonstrate the importance of bacterial components in influencing developmental decisions and lifespan in C. elegans. Furthermore, we demonstrate that C. elegans is a useful model to study bacterial-host interactions.