Multicellular organisms undergo a complex developmental process, orchestrated by the genetic information in their cells, in order to form a newborn individual from a fertilized egg. This complex process, not completely understood yet, is believed to have a key role in generating the impressive biotic diversity of organisms found on earth. Inspired by mechanisms of Eukaryotic genetic expression, we propose and analyse graph grammars with string-regulated rewriting. In these grammatical systems a genome sequence is represented by a regulatory string, a graph corresponds to an organism, and a set of graph grammar rules represents different forms of implementing cell division. Accordingly, a graph derivation by the graph grammar resembles the developmental process of an organism. We give examples of the concept and compare its generative power to the power of the traditional context-free graph grammars. We demonstrate that the power of expression increases when genetic regulation is included in the model, as compared to non-regulated grammars. Additionally, we propose a hierarchy of string-regulated graph grammars, arranged by expressive power. These results highlight the key role that the transmission of regulatory information during development has in the emergence of biological diversity.