While the quest for the cosmological parameters has met spectacular progress, understanding the processes regulating galaxy formation is still a major open issue in observational cosmology. We now have a fairly detailed census of the diverse galaxy populations in the distant Universe, hence the time is ripe for fundamental advances in understanding galaxy formation and evolution in the crucial first few billion years since the big bang. This requires going beyond simply counting and classifying galaxies, and to observationally constrain and clarify the physical processes that operated at those early epochs. I have contributed to this effort by pioneering a new selection technique that is allowing us to build representative, unbiased samples of galaxies in the redshift interval 1,4 < z < 2,5; i.e. at the peak of star-formation, mass assembly and AGN activity. By applying this "BzK technique" I have been leading research projects that have now provided major new results on high redshift z~2 galaxies. These include the widespread presence of previously unknown Compton-thick AGNs inside massive galaxies; the major phase of star formation at very high rates; and the existence of evolved galaxy clusters containing X-ray emitting gas already at z~2. Building on the legacy of these discoveries and critical results, I ask for support to fund the establishment of a new research team to lead research aimed at exploring thephysics of galaxy formation in the distant Universe. With three postdocs each year for a total of 5 years, we will pave new avenues towards understanding the relation between black holes and galaxies at the time of their major mass growth and assembly. In a full multiwavelength approach, by obtaining and using data from all major observational facilities (both in space and on the ground) we will aim to clarify the physical trigger of downsizing, catch AGN feedback in action and assess its role in galaxy transformations, along with the effects of the environment, gas accretion, star formation and merging in driving galaxy formation.