Vertebrate skeletal muscles comprise distinct fiber types that differ in their morphology, contractile function, mitochondrial content and metabolic properties. Recent studies identified the transcriptional coactivator PGC-1alpha as a key mediator of the physiological stimuli that modulate fiber-type plasticity in postembryonic development. Although myoblasts become fated to differentiate into distinct kinds of fibers early in development, the identities of regulatory proteins that determine embryonic fiber-type specification are still obscure. Here we show that the gene u-boot (ubo), a mutation in which disrupts the induction of embryonic slow-twitch fibers, encodes the zebrafish homolog of Blimp-1, a SET domain-containing transcription factor that promotes the terminal differentiation of B lymphocytes in mammals. Expression of ubo is induced by Hedgehog (Hh) signaling in prospective slow muscle precursors, and its activity alone is sufficient to direct slow-twitch fiber-specific development by naive myoblasts. Our data provide the first molecular insight into the mechanism by which a specific group of muscle precursors is driven along a distinct pathway of fiber-type differentiation in response to positional cues in the vertebrate embryo.