During development, the establishment of cell polarity is important for cells to undergo asymmetric cell divisions that give rise to diverse cell types. In C. elegans embryos, cues from the centrosome trigger the cortical flow of an actomyosin network, leading to the formation of anterior-posterior polarity. However, its precise mechanism is poorly understood. Here, we show that small GTPases have sequential and crucial functions in this process. ECT-2, a potential guanine nucleotide-exchange factor (GEF) for RHO-1, was uniformly distributed at the cortex before polarization, but was excluded from the posterior cortex by the polarity cue from the centrosomes. This local exclusion of ECT-2 led to an asymmetric RHO-1 distribution, which generated a cortical flow of the actomyosin that translocated PAR proteins and CDC-42 (Refs 4, 5) to the anterior cortex. Polarized CDC-42 was, in turn, involved in maintaining the established anterior-cortical domains. Our results suggest that a local change in the function of ECT-2 and RHO-1 links the centrosomal polarity cue with the polarization of the cell cortex.