Five years after their discovery, much of the interest in iron-pnictide materials remains in understanding not only their superconducting transition at nearly 60K, but also the nature of their normal state. In this context, a hotly debated topic is the origin of the tetragonal to orthorhombic transition, which either precedes or happens simultaneously to a magnetic instability, and persists even in the vicinities of the superconducting dome. Experiments have revealed that the anisotropies in this orthorhombic phase cannot be explained by the small lattice distortion alone, suggesting that the tetragonal symmetry breaking is driven by electronic degrees of freedom, dubbed nematic in analogy to the physics of liquid crystals. In this talk, I will present a consistent microscopic theoretical model for this nematic phase and explore its manifestations in a variety of macroscopic properties of the iron pnictides ' such as elastic, magnetic, and transport properties. The model is rooted on the degeneracy of the magnetic ground state of these materials, which, allied to the coupling to the lattice and to the orbital degrees of freedom, leads to a spontaneous tetragonal symmetry breaking in the paramagnetic phase. The scattering of electrons by spin fluctuations in the nematic phase leads to an anisotropy in the resistivity, whose sign changes from electron-doped to hole-doped compounds. Finally, I will also discuss the impact of both nematic order and nematic fluctuations to the unconventional s+- superconducting state of the iron pnictides.