The fate of the vulval cells in Caenorhabditis elegans is specified, at least in part, through a highly conserved RTK/Ras mediated signaling cascade that negatively regulates the activity of the ETS-like transcription factor LIN-1. The Hox gene lin-39 functions downstream of both, the LIN-3/RTK/Ras pathway and LIN-1 and plays a pivotal role in controlling vulva cell competence and induction. Here we show that LET-418, a C. elegans ortholog of the human NuRD component Mi-2, negatively modulates the activity of lin-39. LET-418 interacts in vivo with specific regions in the promoter of lin-39 and this interaction depends on LIN-1. Our data provide evidence for a model in which LIN-1 recruits LET-418/Mi-2 as co-repressor to the promoter of lin-39, thereby restricting its activity to the basal levels required in the vulva precursor cells (VPCs) for normal vulval development. Thus, our data suggest that the interaction between LIN-1 and LET-418/Mi-2 may link RTK/Ras signaling with chromatin remodeling and gene expression.