The lin-12 gene of C. elegans encodes a predicted transmembrane protein that controls a decision by two cells, Z1.ppp and Z4.aaa, between the anchor cell (AC) and ventral uterine precursor cell (VU) fates. We performed laser ablation experiments to demonstrate that specification of the VU fate of Z1.ppp or Z4.aaa depends on an "AC-to-VU" signal from the presumptive AC. We generated genetic mosaics in which defined cells lacked lin-12 activity. By correlating the fates of Z1.ppp and Z4.aaa with the lin-12 genotype of nearly every cell in these mosaics, we conclude that lin-12 function is VU cell autonomous. We present a model in which lin-12 functions in the receiving mechanism for the "AC-to-VU" signal leading to the specification of the AC and VU fates of Z1.ppp and Z4.aaa.